Family Financial Concepts

Family Financial Concepts

Each family will always be faced with decisions about his finances. Buying a new TV or not? Buying clothes in a shopping mall, which is offering discounts up to 50 percent or not?
Buying a new car or not? With better credit or cash? If credit institutions, which are selected?

All of these often become the norm in family finances. However, the problem is that very few people pay attention and consider carefully the financial decisions that will be taken.
Average knowledge of our society with respect to the family finances are very limited. Although many books are available at bookstores with respect to the family finances but a few of the people who consciously learn.

Very surprising indeed, the public every day, confronted by the decision or the financial game. However, very few who try to know how money works and how they affect their lives.
During infancy to adulthood today, maybe you never get a comprehensive financial advice. Maybe you get a little advice from your parents and a few of your friends, but you almost ignore it. The school also does not teach how money plays a role in your life. Or in other words, schools do not prepare you to face the future life.

But there is good news for you who are less familiar with how to manage finances, especially the family finances by following some basic principles of finance is relatively simple. Of course you have to keep memperlajarinya to add your skills related to family finances. Dangat it all depends on you. Finance you can stay in good condition with minimum effort by simply focusing on several essential with respect to finance.

No matter how strong your finances now, ignore the financial problems or the game of money can lead to the collapse of the financial condition of the family.

Harmony Living Value and Money
Simple lifestyle, so many phrases that echoed in the New Order era. Apart from the failure of implementation, the phrase was very good and relevant in providing meaning in family finances.
There are people who interpret it simply by watching the trend with a very tight spending, like wanderers in the desert, which oversees drinking water. Meaning as it does not solve the problems, namely inner and outer prosperity. Instead excessive restrictions will damage family life satisfaction.

The difference between cheap and simple like the difference between art and pornography: hard to define but we can feel it when we see them. Terlau accurate definition is not important.

Even more important is to understand the point. The essence of simplicity is to distinguish between needs and wants. This distinction becomes very important in cultivating a harmonious relationship and better with respect to money. In this case there is no single formula that can meet everyone's standards.
The simplicity associated with the awareness to try to limit life to focus on the basic needs of family life. To live simply need to remove a luxury lifestyle.

In order for simplicity can be accomplished, required a paradigm shift from the inside or a genuine internal belief. Implementation of the new perspective it will be much easier when aided by devices such as budget planning.

Art Set Budget
The hardest part of personal finance is not to learn the game of stocks, bonds, or a pattern of increasing wealth. Develop good habits regarding personal finances, patience, and discipline in the shop, is the hardest thing in financial planning.

The essence of managing the budget is able to allocate funds for all future desires or goals based on priorities with limited income every month. Therefore, I believe that the budget is the financial heart of the family.

There is a conscious person does not do the budget, but may continue menyisishkan money for his future goals. People like that are very rare. They see no need to create a family budget because they can naturally frugality and discipline.

But for us ordinary people, managing the budget becomes very important. For short-term attractiveness of desire, the allocation of long-term goal to be forgotten.
There is one strategy which I believe you can do with respect to the financial budget, by cutting or set aside in advance of the monthly inflows for future financial goals, such as pension funds. The key word is cut off at the front. So practical, you can only spend money at this time is left.

If you wish to further learning how to budget one step you have to do is to record all expenditures that you do every month. Our intention, record all your daily spending and family do. To record the expenditure in some categories, for example, fixed and variable expenses.

Perhaps you feel that the simplest way is too trivial for a forward like you, but one thing must be remembered that a large ship sinking could occur because only a small leak in the hull ships. Sometimes items of expenditure "small" could damage the financial order that you have built together.

Good and Bad Debt
Debt is a double-edged sword. So you do not cut it, remember this simple rule: you should borrow for investment potentially grow, but avoid the debt for things that consumptive and depreciate.
So the views of elements of the debt itself, it can be concluded that there is good debt and bad debt. Bad debt is debt with high interest rates (always so) and to buy assets that nonproduktif. Examples are debt or personal loans invidu a lot lately to offer relatively low interest, or debt vehicles. Perhaps you are wondering why bad debt vehicles?

This relates to the difference between needs and wants. When the decision to owe a vehicle based on the need to facilitate their transport you then it's a natural thing. But if the debt is only due to the desire to have a second or third car, this is called bad debt.

Meanwhile, good debt is debt that in the long term will provide the results of the debt that you take. For example, you owe it to buy houses.
And in the next few months you can rent them out, so that direct you to get out of debt you are doing. better yet if the results can rent greater than the amount authorized in monthly installments. Thus at the end of the term you get the value of productive assets that generate regular income for your finances.

Life Risk
Risk here can be risks in life as well as risks inherent in investing. Risk the lives need protection, like a wise investment needs to be managed by diversification. General life risk protection through insurance. Loss of regular income can lead to changes in financial circumstances who had been safe and peaceful change becomes a mess. The risk of death and life as layoffs could adversely affect family finances if you do not maintain and plan wisely.

For that, need to be prepared two important protection, ie an emergency fund and insurance. Allocation for emergency funds can be utilized to keep the risks of short-term impacts, such as layoffs, in the hope that in the short term you can work again.

With the existence of this fund, you reduce the need to sell assets with large pieces to cover that risk. Financial professionals always encourage the family to provide funds amounting to at least 3-6 times the monthly living expenses.

And the second is to meet the needs of life insurance to protect families from financial disaster in case of death risk in the financial backbone of the family (the largest revenue source).

Investment risk must also be managed wisely, which generally can be reduced by diversification, with a measurable risk that can provide a more optimum results. Placement on the various types of assets is an important factor in investment performance.

Money Value of Time
Money and time also have close ties. For example, if you have a longer period like 30 years not 20 years to reach retirement you want, with as much interest you will need a much smaller allowance.

So if you look at it further, should the funds you have now investasikanlah before use to buy assets that are not productive. In other words you put off pleasure now with the goal of achieving peace and the future.

Time could also undermine the value of our currency with inflation. When in the 80s you only need 30 million fund to buy a car, now to buy a car at least you have to spend 100 million's. Due to inflation your buying power to decrease.

(From sinarharapan)