6 Principles of Financial Management

Financial problems often become major issues in daily life - today, especially for those who do not know how to manage it. With the increasing needs of life, coupled with the consumptive lifestyle, then we often feel that the money we have always less, and often end up with debt. In principle, the financial management is divided into six principles:

 The main principle of the management of expenditure is not excessive spending and set aside a portion to be saved as an emergency fund. You need to create a monthly budget in the following order:

6 Principles of Financial Management


Each person received a different incomes. Income you receive each month should be used for personal needs and partly set aside to be saved as an emergency fund. However, often a lot of people are not satisfied with the income they receive. They hope the revenue would be even greater. There are many things one can do to increase revenue. The factor that sets it apart is CAPITAL. What we mean by the Capital here are not necessarily specifically the money. Capital which you can use to manage your income is:

 Capital Yourself

Yes, yourself is your capital first and foremost. Knowledge, creativity, attitude, decision making, the ability to analyze, physical energy, strength and endurance, health, skill, dexterity, as well as the appearance and charisma is your main asset in creating revenue. Therefore it is very important to invest in yourself. The higher your skill, the greater the income you receive.

Capital Yourself + Material

Material is the added value of your capital. Often people think money is the main capital, and few people are wrong to think so. The money is part of the capital of the material, which also includes, land, buildings, furniture, equipment, raw materials, equipment, decoration, and so on. By having the ability of self-will make your superior, when coupled with the material, it will give you the added value that will make you a far superior.

Capital Yourself + Material + Management

Having high self capability and material possible for it satisfactory for some people. However, just by relying on themselves and their own material they will limit your progress. When the material is a value-added capital, capital management is the time factor. For more details, let us explain in the following illustration:

"You have the ability to cook is very good because the cooking is at the same talents and hobbies. At the beginning you just have the ability capital himself and decided to work as a cook in a restaurant with a salary of Rp. 6 million per month. After some time, you managed to raise money to open a depot dining manage themselves and generate income of Rp. 15 million per month. Improvement of your income Rp. 6 million per month has increased by Rp. 9 million to Rp. 15 million per month.

Then, you work together with your friends - your close friends to expand our business by opening branches in several locations and hire lots of cooks and waiters. Your little Depot has developed into a food franchise business with you as its management. Say one of your branches generate revenues of at least Rp. 20 million per month, if you have 10 branches, please your own time how about - about your income a month. "


Regular expenses, such as electricity, water, gas, taxes, fees, telephone charges, and other routine costs you must pay on a monthly basis.
  • Installments / installment, although payment is also carried out periodically / monthly, installments and payments are not regular fee for a debt, and you should not combine the cost of the debt.
  • Basic costs, such as the cost of food and drink, transport fees / costs for gasoline, household appliances, equipment for work, and others - others.
  • Secondary costs, such as costs for shopping at the mall, the road - the road, the cost of togetherness, and the like.

For point 1 and point 2 is the priority. For 3 points are very important to support your daily life - today, yet to be seen which one is true - you really need with which you want but do not really need. In doing good expense management, saving is a necessary requirement. Make sure you only buy the right - you really need. Frugality, the price often becomes the deciding factor, but it is not uncommon to many people trapped by the prices. Always compare the value of the benefits that you can be compared to the price you pay. That is why many people who once bought in large quantities (especially food products) for wholesale, the price per unit to be cheaper than having to buy them at retail repeatedly. Similarly, if there is a promotion, sale, or as cheap as any fixed discount to be calculated and taken into consideration the benefits. Point 4 is the budget you can save and set aside for an emergency fund, or saved for more important purposes. In the modern era, as now, spending not only use cash but also use non-cash (debit and credit cards) and electronic money (e-money). With the easy payment, the needed discipline to control your spending in order to avoid excessive expenditure (over-spending).


Saving money sounds like an easy thing, but in reality it is often difficult to do. On the principle of expenditure management have discussed about the make savings, and it is the first step, the next step is to save money successfully opted out of the savings. With the savings, we are better prepared financially in the event of an emergency. When an emergency occurs that requires a certain amount of funds and we do not have savings, then we will fall into debt. Saving of a lot better now than sorry later. Keep in mind, flowering savings, debt is also flowering and larger flowers. In addition to emergencies, savings can also be used other purposes not so emergency like a vacation with the family, home improvement, buying a special gift for someone you love, or buy a new vehicle that cost may not be enough of a 1-month earnings. Do not let debt because they do not have savings. Start by opening a regular savings account in the bank and saving regularly, do not forget to ask about the program - savings program available in the bank so you can get more profit. Once you've started saving with the stable and the funds collected are already quite a lot, it is advisable to save money futures such as deposits, or following the deposition of funding programs that provide benefits greater than normal savings.


Debt is a loan. And the name of the loan must be returned, often followed by additional interest or other charges. debt is not always bad. No such thing as good debt (Good Debt) and there is also such thing as a bad debt (Bad Debt). In principle, the management of the debt further encourage the use of good debt when it should owe, and avoid or reduce bad debt. Good debt is debt that is used for business purposes or needs work. For example in the following illustration: "You have to go home from work to office with public transportation and should be changed vehicles 2 times per one-way. If you ride public transportation every time you have to pay Rp. 4000, the one-way requires Rp. 8000, the first day to go home to spend money Rp. 16,000, and in a month with 25 days of work, you will spend money around Rp. 400,000 per month. If the decision was made to buy a motorcycle in the debt / credit with installment Rp. 250,000 per month would be more advantageous than having to ride public transportation to go home four times every day. The difference amounting to Rp. 150,000 you can use to buy gasoline. "When you owe as illustrated above, then you have a debt is good debt because the debt can help you save and improve your quality of life. Conversely, bad debt is debt used to purchase consumptive purposes, such as:
  • Owe to buy new stuff when the old stuff still works fine.
  • Owe for sightseeing or road - the road.
  • Owe to fashion.
  • Owe to eat and drink lavishly.
  • To pay the debt owed to another.
  • Owed for investment, and so forth.

If you have a bad debt, as soon as possible in order to resolve your debt is not bad on your finances as a whole. One source of bad debt is the use of credit cards that are not controlled and can damage your finances. If you must have a credit card, you should look for a credit card that has benefits that can help you to cut your spending.


If you can control your lifestyle, your income, cut your spending, put it aside for savings, and cleared the debt - the debt you are, then we can be sure you will have enough surplus funds over time. This fund is to be used for investment. In principle, investment management is to choose the type of investment that suits you, not for anyone else. Each person chose a different type of investment - different, although some are choosing the same type of investment. It is caused by several factors, namely:
  • Availability of information
  • Risk (Conservative, Moderate, Aggressive)
  • Total assets
  • investment Objective
  • The rate of return
  • The length of time the investment

Based on the type, you will use the funds for investment, can be allocated to the following investments:
  • Investments in self-development
  • Investment in own business
  • investment property
  • Money market investments
  • Capital market investment
  • Investment Unit Link
  • Precious metals investment


The principle of protection management is doing financially safeguard measures on the lives of you and your family against unwanted incidents. The likelihood of undesirable events was a risk. the risk can not be eliminated but can be managed. There are three kinds of actions that you can do to manage the risks:
Controlling or reducing the risk by acting as a careful - careful.
Setting up an emergency fund in the form of deposits.
Choosing and buying insurance program.

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