Jakarta, CNBC Indonesia – You may often complain about your financial condition not getting better, or even the opposite. And you may feel that there is something wrong with all this.
Rather than just guessing which expenses are causing financial problems, it’s a good idea to do a financial health check.
The method is very easy, just follow the steps outlined below.
Cash flow health
The first step is to evaluate your income and expenses in a month, starting from when you received your salary at the beginning of the year until now.
Find out what expenses have the greatest value and try to find out whether in that time period your expenses exceed your income.
If your expenses exceed your income, then the consequence you have to face is a reduction in the total savings in your account.
Healthy cash flow is characterized by a surplus resulting from a reduction in total income and expenses, which amounts to 10% of income.
Amount of debt installments
The larger the debt installments, the heavier the burden on your expenses each month. And that can make it difficult for you to save or invest.
It would be better to keep the installment amount so that it does not exceed 30% of income.
The amount of outstanding debt
Not just installments, the amount of debt must also be maintained properly. Carry out a careful calculation of the total outstanding debt to date.
If the value of the total debt is still below 50% of total assets, then this amount can still be considered reasonable. But if it’s above it, you have to be alert.
Net worth
Net worth is your real wealth or actual wealth. The net worth value is obtained from the reduction of assets and debts.
As long as your net worth is positive, whatever the amount, your net worth is considered healthy. However, if it is negative, it indicates that you have taken on too much consumer debt, and you will be declared to be on the verge of bankruptcy.
Total current assets
Current assets, namely cash and cash equivalents, show the amount of savings you currently have. To determine whether your current assets are healthy or not, you can add up all the money you have and divide it by your net worth.
The ideal current assets are around 15-20% of net assets. Storing too many current assets is certainly not good, because the value of money will be eroded by inflation.
When there is negative cash flow, your current assets will decrease.
Emergency fund amount
The emergency fund value is obtained from current assets in the form of cash and savings divided by total expenses in a month.
The quotient indicates how long you can survive if your income is lost.
For single employees, a score of three is the ideal score. However, for those who already have dependents, the minimum value is six.
Number of investment assets
Have you made any investments so far? Or did you even buy some new investment assets?
To find out the ideal amount of your investment, you can add up all the investment assets you own, such as gold, mutual funds, shares, bonds, property assets and others. After that, the total value of investment assets can be divided directly by the total asset value.
The minimum investment assets are 50% of total assets, the higher it indicates that the better you are at multiplying your wealth.
[Gambas:Video CNBC]
Next Article
Not Always Beautiful, These are the 6 Stages of Life in Retirement
(aak/aak)