Prioritization is an important component of financial planning. To achieve your financial goals, your income and expenses need to be prioritized according to your needs. Here are some tips on how to prioritize your finances.
1. Set your financial goals
Before setting the priority scale, the first thing that needs to be considered is to determine the objectives of the financial plan both for the short term, medium term, and long term. Financial goals need to be made realistically by considering current financial conditions and future income projections with a measurable timeframe. Financial goals need to be written clearly and in detail, so that you have the motivation and commitment to achieve these goals.
2. Review the current financial condition
The next step is to review the current financial condition. With monthly income, it is also necessary to record several things such as the amount of investment value, assets owned, and liabilities that must be paid. The existence of records related to monthly income and expenses can help to control expenses, starting from meeting primary needs, paying obligations, meeting secondary, tertiary, and other needs. This record will serve as an evaluation material so that in the following month the existing income can be managed better to achieve the financial goals that have been set.
3. Look at the level of urgency
Urgency in the financial priority scale means needs that must be met as soon as possible. If there is a need with urgent conditions, it needs to be met immediately. However, if the need or desire can still be postponed without causing problems, it means that it can be made a second or third priority and adjusted to financial capability.
4. Preparing Emergency Fund
In preparing a financial plan, keep in mind to set aside income in the form of an emergency fund. An emergency fund is a fund that is prepared as a reserve fund to deal with unexpected conditions out of control so that financial stability is not disturbed. The amount of emergency funds for those who do not have dependents is 3-6 times the monthly salary, while for those who already have dependents, the recommended amount of emergency funds is 6-12 times the monthly salary.
5. Have the right investment and protection
Investing in various investment instruments is an effort to grow and accumulate assets. Through investment instruments, it is expected that the value of existing assets can increase and not be eroded by the influence of inflation. In addition to investing, financial protection is also needed to minimize financial risks from unexpected events that can damage financial planning. These financial risks can be anticipated by transferring them to another party, namely insurance. You, as the policyholder and main breadwinner, are the first priority to be protected. In addition, insurance can also be used as an inheritance in the form of Sum Assured with a large value and can protect family needs if the risk of death occurs.
To fulfil your protection needs, BCA in collaboration with BCA Life, provides Life Insurance, namely BCA Life Heritage Protection.
Key Benefits of BCA Life Heritage Protection:
- Death Benefit
- Terminal Illness Benefit
- Additional coverage benefit
- Policy Loan Benefit
- End of Insurance Contract Benefit
- Policy Redemption Benefit
For more information about BCA Life insurance, visit your nearest BCA office.