5 Obligations in Money Management

Whatever your job, regardless of your income, everything can be better managed to avoid a deficit. A proper money management and personal financial planning can provide the solution of financial problems even build self-reliance. Most people often claimed never to set aside money for savings include less investment. The reason is always because lack of money.

They feel that their monthly earning is still too small to set aside some money for saving, moreover for investment. In fact, the reduction in consumption of goods that are not important with limited financial condition, such as jewelry or clothing that varies model and color, you must have ability to set aside money each month.

Stages that could start in managing your personal financial are as follows:

1. Pay off debt

Although your financial management is already a mess, it's never too late to fix it. Start by setting aside money from earnings and pay existing debt. Debt is your obligation. Unpaid debt will damage your credibility, especially your financial records in bank. You are risking your reputation if the debt is not repaid immediately. Set aside a maximum of 30% of your earnings to pay off debt.

2. Save

Rest assured that regardless of income, must be set aside as savings. Arrange your money of about 10-20 percent of income for savings. In order for this plan can be running, limit the cost of consumption. People are often tempted to buy goods which are not too important to be purchased ,but only because of the influence of a friend or a trend. Strict with yourself and prioritize your mostly and primary needs!

3. Emergency Fund

Provide a reserve fund as an emergency fund. Unforeseen needs will always exist, for example, a disease that must be treated in hospital. Certainly require quite big of cost, isn't it? Set aside a fund of five percent of income. Prepare an emergency fund of up to a period of six months. As anticipated, create a special passive account for the fund. Separate this account from your active accounts that are used for daily needs.

4. Insurance

After you are reducing the monthly needs, paying off debt, saving, and preparation for an emergency fund, use the rest for insurance. Ensure to buy life insurance, especially for householder in your family. Anyone who has the main income to meet the needs of your family, you or your wife, should have life insurance. So if anything happens to him, other family members can still run and financed from the insurance for a specified period.

5. Investment

Investment should be done after all the above obligations have been fulfilled. The simple form, invest your money in gold. However, pay attention and understand the value and quality when it comes to investing in gold. Money for investment funds can be allocated from other revenue sources such as bonus, inheritance, outside the main income. There are many type of investment, risk, and its value at a later date. For that, carefully identify the investment products before selecting it.

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