5 Tips for Managing Finances in Crisis Times

The COVID-19 pandemic has affected all sectors of the economy. This condition has an impact on the occurrence of the termination of employment. Managing Finances Not only that, but many informal workers also have reduced income due to limited economic activities.
The sluggish economy can also be seen from the occurrence of deflation in three consecutive months. This reflects the weakening of people’s purchasing power. On the other hand, the number of public deposits in commercial banks in August 2020 reached above Rp6,500 trillion, or an increase of 2.74 percent from July, higher than the monthly average percentage increase since the beginning of this year which was only 0.98. percent.
These data show that during the pandemic, people prefer to save more money and reduce consumption. Is this phenomenon good for us?
Diligent saving is certainly good for your future, but it might not be right if we end up being too afraid to spend money because of this pandemic. Especially if you feel the percentage of interest on savings or deposits at the bank of your choice is reduced.
Quoted from lifepal.co.id, here are 5 tips for managing finances in times of crisis to keep your financial condition healthy.

Manage Variable Expenditures with Average Method

In the regulation of monthly cash flow (income and expenditure), expenses are divided into two types, namely fixed and variable expenses (variable expenses). Fixed expenses can be in the form of daily vehicle fuel costs or transportation costs, food shopping costs, electricity costs, and others.
Fixed expenses are certainly easier to record and determine the amount than those that are not fixed. Meanwhile, variable expenditure does not. Especially for managing variable expenses, calculate the average of your variable expenses in three months or more.

Prioritize Between Needs and Obligations

Prioritize your expenses for needs that must be met or paid first. What are those needs?
The first, of course, is the need to buy necessities such as food and drink, to save the cost of children’s education. In addition, there are other mandatory expenses, namely paying taxes and debt installments if any.
Needs that are desires or related to hobbies or lifestyle can certainly be reduced a little, especially if our financial condition is still not healthy.

Stop Adding Debt and Prioritize Paying Interesting Consumer Debt

If you have short-term debt that is consumptive and high-interest, whether on a credit card, installments without a credit card, or online loans, pay it off while you still have sufficient cash reserves.
Letting the debt remain can disrupt your cash flow in the following months. In this pandemic period, it is also a good idea to no longer add debt for consumptive purposes. Especially for going on vacation, buying gadgets, or holding a wedding party.
If you have to go into debt, just make sure the debt you are applying for is productive. With a note, your total debt does not exceed the value of your assets and the installments of all your debts per month are still below 35 percent of your income.

Take Advantage of Insurance for Risk Protection

Take advantage of insurance for protection or risk protection needs, and buy health insurance or life insurance with pure benefits for health and life protection.
Not a few insurances are offered along with investment packages. One thing you should know is, premium contributions for insurance with this feature will be divided into two, namely for protection and insurance needs.
Insurance with investment features is useful to make customers no longer confused in terms of investment. However, with the monthly fee divided between protection and investment, both protection and investment will likely be less than optimal.
In addition, the investment risk is also fully borne by the customer. Try as much as possible to allocate funds a maximum of 10 percent of monthly income and no more, for protection needs.

Set aside money to invest

Every month, you still have to prioritize spending to invest in to meet short-term and long-term goals. Given that spending on desirable things is being reduced, then this is a good time to increase your investment.
Write down in detail the things that are your goals in the short and long term. Also, write down how much money will be needed to meet that goal in the future using the estimated annual inflation. Then choose various investment instruments that match your risk profile.
If you have a conservative risk profile or are looking for an investment with a fixed yield, choose government securities, namely ORI018 which is still offered until October 29, 2020, as an alternative to deposits.
The Government of Indonesia’s objective in issuing ORI018 is to invite the public to be involved in the national economic recovery and development program, after the COVID-19 pandemic.
ORI018 has a fixed coupon yield of 5.70 percent per year. Although the maturity of these securities is three years, you can sell them on the secondary market if you need funds for urgent needs. Considering that this is a government bond, its security is guaranteed.

By selling it on the secondary market, you have the potential to gain capital gains. In addition, the final tax from ORI018 is only 15 percent or less than deposits. Those are 5 tips for managing finances in times of crisis that you can do and apply.