Anti Waste! Here Are Some Budgeting Methods to Manage Your Finances

Kapanlagi.com - Struggling to control your spending? Or do you want to save to meet your financial goals in the future? Don't worry, you're in the right place! Here, we will explain budgeting methods that can inspire you to manage your finances better. For those who don't know, budgeting is the process of planning, managing, and monitoring your expenses and income over a certain period.

With good planning, you can be more disciplined in controlling your spending and preventing waste. That's why the ability to create a personal budget plan is essential for everyone, to achieve financial goals and avoid economic problems.

So, for those of you who want to manage your personal monthly budget to avoid wasteful behavior, a consumptive lifestyle, and unplanned expenses, there are various types of budgeting methods that you can apply. You need to adjust this to your financial situation and condition, okay? To understand better, check out some recommended budgeting methods below.

1. The 80:20 Method

For those of you who prefer simplicity, the budgeting method with the 80:20 formula, also known as the Pareto Principle, is worth trying. As the name suggests, this method requires you to divide your income or salary into two parts with percentages of 80 percent and 20 percent. Here’s an explanation of the division:

• 80% is used for living expenses. Eighty percent of your salary or income should cover routine needs such as rent or mortgage, transportation, food, bills or installments, and even entertainment.
• 20% is used for savings or investments. Set aside 20 percent of your total income for savings or investment. You can save it in the form of deposits, mutual funds, stocks, or gold.

For example, if your monthly income is Rp5,000,000, then Rp4,000,000 (80%) can be used for daily living expenses, and Rp1,000,000 (20%) can be directed towards savings or investments.

2. Method 40:30:20:10

Need more detailed financial planning? The 40:30:20:10 budgeting formula is perfect for you. As the name suggests, you will divide your monthly income into four categories with percentages of 40, 30, 20, and 10 percent. Here’s the explanation:

• 40% for basic needs, such as food, housing rent, transportation, electricity bills, water, and internet. Also include entertainment costs like going to the movies or hanging out at cafes in this category.
• 30% for paying installments like mortgages, vehicles, credit cards, and debts if any.
• 20% for savings or investments. This is important to prepare for financial stability in the future.
• 10% for charity and benefits, such as donations, zakat, or almsgiving to those in need.

If your monthly income is Rp7,000,000, then Rp2,800,000 (40%) for basic needs, Rp2,100,000 (30%) for installments, Rp1,400,000 (20%) for savings, and Rp700,000 (10%) for donations.

Pay Yourself First Method

For those who often fail to save, here’s the Pay Yourself First method that focuses on setting aside income for savings. If you usually save from the leftover salary after allocating for other expenses, in the Pay Yourself First method, you should first separate the savings fund from your monthly salary, and then use the remainder for daily living expenses.

Tip: Open a separate account for your savings. So when the salary comes in, immediately transfer a certain amount of money that you have determined into your savings account. This way, you will be more disciplined and committed to saving for financial goals in the future.

Daily Method

Next, there is the daily budgeting method. This method is suitable for those of you who want to manage personal finances in detail every day so that daily expenses can be better controlled. The daily method will help you manage finances gradually, and you can also immediately know how the budget allocation is each day.

To apply this method, first find out how much you spend on daily needs. Then, set a realistic daily spending budget limit. After that, make sure that your daily expenses do not exceed the specified budget amount.

For example, if the daily budget limit you set is Rp150,000, then make sure that your daily needs can be met well without exceeding the budget limit. Don’t forget to evaluate the budget at the end of the month, find out if your expenses are in line with the budget or if they are actually higher? Find the reason and look for the solution. With this step, you can manage your finances more effectively.

Kakeibo Method

Kakeibo is a Japanese budgeting method that is also interesting to implement because it can simplify financial management, especially for those who want to live frugally. This method has a systematic budgeting concept and focuses on financial goals. So how is it implemented?

First, record all your income at the beginning of each month, from your salary to additional earnings. Prioritize setting aside a portion of your income for savings first, and then use the remainder to allocate to various expense categories based on four categories: food costs, bills, installments, and other needs.

The kakeibo method will make it easier for you to introspect your finances to achieve both short-term and long-term financial goals easily.

The various budgeting methods above can be applied to manage expenses while also achieving financial goals. However, it cannot be denied that sometimes there are urgent needs that require you to spend unexpected funds. Now, if you do not want to disturb your financial planning but still want to meet sudden needs, then paylater could be the solution.

This is because paylater can provide flexibility in payments. However, choosing a paylater service should not be done carelessly; make sure you choose one that is safe. One of them is SPayLater by PT Commerce Finance, which is licensed and supervised by the Financial Services Authority (OJK). SPayLater offers various installment tenor options, ranging from 1 month, 3 months, 6 months, 12 months, and others. Choose the tenor that best suits your needs.

In addition, SPayLater can now be used not only for online payments but also for offline payments directly in stores or restaurants. Besides all these conveniences, SPayLater also presents attractive promotions, namely SPayLater Pay QRIS with discounts up to 500K and no handling fees, which runs from November 18 to December 31, 2024.

Therefore, for those of you who want to control monthly expenses and meet financial targets, you can try one of the budgeting methods mentioned above. Even without disrupting financial planning for a safer future, you can also wisely utilize the paylater payment method to meet emergency needs.

(kly/tmi)