If you are tired of running out of money, this is the right time to manage finances! Start improving your spending patterns, forming a saving habit, or increasing your income so you don't run out of money. It will help you achieve financial freedom and live a peaceful life.
Step
Part 1 of 4: Forming the Right Mindset
Step 1. Define your goals
To improve your financial condition, set specific targets that you want to achieve. Imagine what financial condition you really want and think about the effort you can put into achieving it.
- Set short-term and long-term targets so that you stay motivated because having a target makes you always feel motivated to achieve it.
- Make a budget for non-routine expenses every month. If this month's expenses have exceeded your budget, you'll need to reduce your next month's budget.
Step 2. Don't compare yourself to others
Using money beyond your means so as not to lose to your friends or wanting to show off your lifestyle is just a pain in the ass. Live within your means and don't compare yourself to others.
- You will not feel happy and may end up in debt if you measure your self-worth based on what you have.
- Eliminate consumerism. Stop reading fashion magazines, home decorating, electronic devices or watching TV shows that show a lifestyle so that you feel disturbed if you don't have famous designer clothes, the latest type of gadget, or buy luxurious furniture.
- Choose quality items that last and don't waste money just to keep up with fashion.
Step 3. Record your expenses
In order to be able to monitor what you spend money for, carefully record every rupiah you spend. Take notes in a notebook or use an electronic device (if you make payment transactions using a card), but make sure you record all transactions correctly. These habits help you use your money wisely.
- Do cost categorization and calculate the amount every month. For example: group expenses by categories of food, daily necessities, transportation, utility costs, insurance, entertainment, and clothing. After that, calculate the percentage of costs per category of monthly income to determine which costs are too large.
- Before buying things you don't really need, think about how many hours you have to work to pay for them.
- Budget for spending large amounts of money. For example: if you have to pay a car insurance premium of IDR 2,400,000/year, add IDR 200,000/month to your monthly budget.
- To calculate the amount of money you can spend each day, subtract fixed costs from your monthly income and then divide by 31.
Step 4. Get out of debt
If you run out of money because you have to pay off credit card debt, car payments, or other loans, think about ways to pay off debt quickly.
- Make payments in larger amounts each year so that the debt is paid off faster.
- Although in the short term you have to tighten your spending budget because you use more money to pay off debt, this method is very useful in the long run because you will be free from debt faster.
- Try to figure out how long it will take you to pay off your credit card debt if you only make the minimum payments each due and how much the interest will be.
- Negotiate to ask for relief in terms of debt repayment, for example by applying for a reduction in loan interest rates.
Step 5. Start saving
Maybe you think how you can save if you always run out of money, but saving regularly keeps you out of debt. Start collecting IDR 50,000 every month just in case there is an unexpected need.
- Don't forget to save for retirement! If you work for a company, retirement funds are usually deducted from your paycheck and deposited by the company, but you can also open a personal savings account.
- Saving is made easier if you provide instructions for automatically debiting your savings account or through payroll deductions, so you don't have to do it yourself.
- Do not use savings funds to splurge.
Part 2 of 4: Avoid Troubles for Money
Step 1. Don't lend money to other people
If you can't pay the bills yourself, don't lend money to anyone, even if you want to help someone who needs financial assistance.
Step 2. Do not withdraw the loan from the credit card
This method seems to be the best solution, but you will be stuck in debt problems if you withdraw a loan from a credit card because the interest is very high.
Step 3. Calculate the amount of money you have to spend
Before withdrawing a loan or buying goods in installments, you must know the amount of monthly installments, how long the installments are, and the interest costs you have to pay.
- Under certain conditions, paying interest is the best solution. For example: for people who can't afford to buy a house in cash, instead of renting, they can still save if they buy a house through a lease agreement.
- Think carefully before buying items that will depreciate through a lease, especially if you want to buy a car and charge high interest rates. After a few years, the price of the vehicle will be much cheaper than the purchase price. This also applies to real estate purchases when market conditions are sluggish.
- Get in the habit of reading credit card bills carefully because loan interest rates can rise at any time.
Step 4. Control the impulse to shop
Managing finances will be easier if you plan what to buy.
- Don't go to the mall if you can't control your urge to shop at the mall.
- Before shopping, make a list of what you need.
- Spend time with frugal people. You can be affected by negative habits if you often hang out with extravagant people.
- Put off plans to buy expensive items. The desire to shop usually goes away on its own after a few days.
Step 5. Use credit cards wisely
Don't use a credit card if you can't keep track of regular expenses and shop within a budget.
- Instead of using a credit card, paying cash helps you calculate how much you should spend when shopping.
- If you can already use a credit card within your budget, look for a credit card that is free of annual fees and will provide cash or other incentives as a gift. However, you must pay off your bills on time to get incentives and not be burdened with interest costs.
Part 3 of 4: Reducing Expenditures
Step 1. Observe daily or weekly spending patterns
Once you can determine what you're spending your money on, start eliminating extravagant expenses.
- Stop smoking because buying cigarettes is a source of waste. In addition, this habit can cause health problems that require large funds.
- Instead of buying coffee at the coffee shop every day, start making your own so you can save money. If you want to enjoy a coffee with a special blend like that served in a coffee shop, look for the recipe on the internet.
- Buying water or bottled drinks will be much more expensive than drinking water by refilling water bottles.
- Get in the habit of bringing lunch to save, instead of buying food in the canteen. If you can't do this every day, start a few days a week to form new, healthier habits.
- Buying the lottery is not a wise way of using money, especially if there are other more important needs.
Step 2. Buy used items that are still worth using
You can save money by buying used goods, for example by buying a used car or used furniture that is still in good condition.
- Sometimes, thrift stores sell clothes that have never been worn at very low prices.
- The latest models of electronic devices are usually more expensive. If there is, an earlier model with the same features will provide the same benefits, but usually sell for a lower price.
- If you enjoy doing handwork, look for old furniture instead of buying new. If needed, you can repaint it to make it look like new.
Step 3. Determine the monthly fees that can be deducted
If you have to pay membership fees or magazine subscription fees, calculate how much you have to pay each month, consider the benefits you will get, and decide whether you should unsubscribe.
- Don't pay unnecessary fees. For example, if you subscribe to a TV program you never watch, cancel it without feeling sorry. Likewise if you pay your cellphone bill to pay for internet quota that you never use.
- If you want to pay an annual fee as a customer of a particular store, calculate how much you save when shopping for products at that store and compare it to the fees you have to pay.
- Look for a less expensive alternative to using the service you need. For example: if you get a lot of benefits by exercising regularly at the gym, you don't have to stop exercising to save money. Compare with fees at other gyms or choose a membership program that charges lower fees if you want to continue training at the same club.
Step 4. Compare prices across multiple stores
To get around a very tight financial budget, you have to look for the best deals. Before shopping, make it a habit to compare the prices of items you buy regularly or before spending large sums of money.
- If you have been a loyal customer of a certain insurance company or shop at the same supermarket, find out if there is a better offer. It's possible that prices elsewhere are cheaper.
- Buying certain products online will usually be cheaper, but don't forget to factor in shipping costs.
- Take advantage of the discount coupons given as gifts. Keep in mind that many stores accept coupons from competitors.
- Bringing a personal vehicle to shop far away (because the price is cheaper) is not necessarily more economical because the cost of gasoline may be greater than the savings due to the difference in the price of goods!
- Be wary of "pulling" offers for items you don't need. Even though they are cheap, it will be more economical if you don't buy them.
Step 5. Look for better deals
Ask the service provider to provide a better offer, especially if you have been a loyal customer, even though your request may be rejected.
Use the same approach with catering providers, insurance companies, and salon owners you usually visit
Step 6. Reduce spending on food and entertainment
Eating out in restaurants or going out for recreation costs a lot of money. Look for other, less expensive ways to prepare meals or have fun.
- Learn to cook and store enough ingredients in the fridge. If you come home late at night, cook a menu with recipes that are practical and easy to prepare.
- Instead of going out to a restaurant with friends, invite them to eat at home and have everyone bring some food to share.
- Look for cheap concert and show tickets in your city or take a leisurely stroll through the neighborhood to relax your mind!
- Get rid of the habit of buying souvenirs when visiting exhibitions.
- If you enjoy watching sports, watch inter-school games instead of having to buy tickets to see professional games.
- Look for the best deals if you want to travel. Many ticket sales via the internet compete with each other by giving discounts.
Step 7. Don't hire people to do a job you can do yourself
It would be nice to have someone help wash clothes or sweep the yard, but why waste money if you can work alone?
Learn how to do repairs if you don't understand them. If something needs repair, look up video tutorials online or take a course to learn how to repair things yourself at home
Step 8. Make savings by saving energy
Try to cut your monthly bills by saving energy consumption every day.
- Cover the vents if you use air conditioning to save electricity consumption. In addition, you can use solar panels or a roof covered with aluminum sheet to save even more.
- In the rainy season, lower the temperature of the air conditioner by a few degrees so you can save significantly on your electricity bill. If you live in a cold area, the programmable thermostat will automatically adjust the room temperature to maintain the correct temperature when you are not at home. (The temperature inside the house must be kept warm so that the drains do not freeze).
- Buy energy efficient electronic devices. To save on electricity costs, replace incandescent bulbs with energy efficient light bulbs.
- Turn off lights before leaving the room and unplug electronic devices when not in use.
Step 9. Avoid bank fees
Choose your bank and credit card issuer wisely to avoid unnecessary fees.
- Perform ATM transactions using ATM machines that are free of charge.
- Pay credit card bills on time to avoid being fined.
- Open a bank account or savings and loan cooperative that provides free facilities to check transactions and balances.
Step 10. Don't spend a few days a month
Challenge yourself like playing a game: can I live my daily life without spending any money today? How well can I make use of the items, food, and other things at hand? Notice how often you do this as a new habit.
Part 4 of 4: Increasing Income
Step 1. Find a better job
If frugality doesn't help, it's time to look for a new job to increase your income. Start by preparing a bio, looking for job vacancies on the internet, and building a network with professionals in the field you are good at.
- Don't forget to look for career advancement opportunities where you work.
- If you like your current job and deserve a higher salary, ask your boss for a raise.
- If you don't have the skills to get the job you want, you should continue your education.
Step 2. Do a side business
Another way to earn extra income is to use your skills to freelance or become a consultant. If that doesn't suit your profession, find a part-time job or use your creative skills to earn more money.
- In addition to working in an office, you can earn money through a side business by selling cakes in the office, receiving sewing, or becoming a real estate agent.
- If you like to be creative, make crafts and then offer them online or open a shop at the mall.
- If you enjoy writing, create a personal blog to make money.
- Be a freelancer who collects questionnaires from a group of respondents, conducts paid surveys, or becomes a “mystery customer”.
Step 3. Sell things you don't use anymore
If there are items you don't need, offer them online for money. Who knows there are people in need.
- If you have enough items that you don't need, offer them at low prices through bazaar activities.
- Offer higher-value items online, such as eBay, Craigslist, or other websites.
- If your clothes are still in good condition but are no longer worn, leave them at a clothing store to sell on consignment. You don't have to sell them yourself and when they sell, you'll receive money.
Tips
- Do not push yourself. Start small, set goals, reward yourself if you succeed, but not by wasting money.
- Open a savings account to buy gifts or take a vacation, but deposit more money than you budget for gifts. You can use the remaining funds to take a vacation or buy something special.
- To always have funds available in your bank account to pay your regular bills, add up the last year's bills by 52 by rounding up to a multiple of 50,000 or 100,000. Don't forget to calculate your quarterly and annual bills.
- Prepare jars to collect coins. If it is full, take it to the bank for exchange. Do not exchange coins at a money changer that charges a fee for counting.
- Buy clothes that can be worn on various occasions, rather than just for certain events.
