Jakarta, CNBC Indonesia – Comedian Bedu emphasized that he is currently recovering from the economic downturn that has haunted him recently. Bedu also said that he was reluctant to discuss matters related to his previous difficult times.
“Yeah, I don’t want to discuss that issue anymore, because I don’t want to anymore,” said Bedu when he was a guest star on the Rumpi program on Trans TV, Monday (20/11/2023), as quoted second.
This statement was made by him following comments saying that he was selling sadness through the media. Bedu also said honestly that this life experience made him sad.
As is known, last October Bedu opened up about his economy deteriorating to the point of bankruptcy. He even had to sell his car because of this problem.
Reflecting on Bedu’s case, almost everyone has faced personal financial problems. Some of them managed to get up, while quite a few ended up getting worse.
In fact, before taking action to improve your finances, you can detect your financial health early by doing this.
1. Liquidity Ratio
This ratio is to measure financial readiness to face emergency conditions such as crises that cause income to be interrupted. This ratio is also commonly called the emergency fund ratio.
Liquidity Ratio = current assets : routine expenses each month
Current assets are assets that are easily converted into cash. For example, cash in savings, shares, mutual funds, or short tenor deposits. Ideally, this ratio is 3-6 times your routine monthly expenses.
2. Debt Repayment Ability Ratio
Debt can be a personal financial disease. When debts are paid too high to be paid every month, it can create new debts that keep rolling in. Finally, the vicious cycle of debt is difficult to break and life becomes uneasy.
This can be anticipated by measuring the level of ability to pay debts as early as possible. The method?
Debt Repayment Ability Ratio = debt paid each month / total income each month
The ideal is 25% to 30%, preferably below that number. If it is more than that, it is better to immediately pay off the debt with a small nominal amount or increase your income.
Then this ratio can be developed by measuring consumer debt alone.
Consumer debt ratio = consumer debt / income
What is consumer debt?
This debt is used for ‘happy-happy’ such as buying clothes, food, plane tickets, hotels, and others that do not include mortgage or vehicle installments or business (productive) capital. It is very good if the value is 0% so that the financial burden is not heavy.
3. Cost to Income Ratio
Next is the ratio to compare the costs of daily necessities incurred each month compared to the costs of income each month. Ideally, this ratio is equal to one, meaning that income can cover all daily needs.
Cost Ratio: Monthly Cost Requirements / Monthly Income
However, it would be very good if it could be less than 1 or 100% because the remaining money can be used for savings, insurance, emergency funds and investments. Even for social or leisure. In this condition, the ideal expenditure for daily needs is 40% – 60% of monthly income.
To maintain this ratio so that it remains ideal or if you want to reduce the ratio, you can do this by saving money or increasing your income.
4. Savings Ratio
Saving needs to be done to purchase future needs or finances. Saving is not only in banks, but can also be done in deposits or other investment instruments.
Savings Ratio: Total value of savings / annual income
Ideally this ratio is 10%, it would be better if the value could be more than the minimum so that finances are healthier.
5. Solvency Ratio
If you want to measure how sensitive your personal finances are to being trapped in bankruptcy, you can use the solvency ratio. This ratio compares wealth with total assets owned. Net worth is obtained from all assets including liquid and long-term assets minus total liabilities.
Solvency Ratio: Net Worth / Total Assets
Ideally this ratio is 35%, if it is bigger the better because the portion of debt in assets is smaller and this means the amount of expenses will be reduced.
Apart from the five ratios above, to face the turmoil of 2023, it would be better to be equipped with insurance as a safety net when unexpected events occur that stop productivity. At least you don’t need to pay a lot of money to go to the doctor or hospital or repair shop. Because the costs are covered by insurance.
[Gambas:Video CNBC]
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