Here's a Strategy for Managing Your Finances So Retirement Can Be More Comfortable

If you are still young, you are surely still very productive in earning your income. There will come a time when you no longer work, or what is commonly called retirement. For you who work at government or private institutions, you are certainly able to receive a pension fund, right?

Even though you receive a pension fund, that does not guarantee that all of your needs and those of your family can be met from that fund. Therefore, everything needs to be prepared early, so that when retirement arrives you will not face financial problems again.

So What Does a Strategy for Managing Finances and Saving for Retirement Look Like?

When it comes to money, it is certainly nothing new. All of your needs and wants can be met with money. However, you must also be careful, because if you use money carelessly you can run into financial problems such as getting trapped in debt and other troubles.

Managing finances must start with covering your daily basic needs, and only then setting aside funds for other things. If you prioritize wants alone, one day you may find yourself without enough money to cover food and housing.

For those who are just starting their career or whose career path is still long, you should begin preparing for your living needs in old age. Old age may still feel far away, but preparing early will be better for your life and your family's future. Let's look at several strategies for managing finances and saving for retirement.

Getting Into the Habit of Saving and Investing

When you were little, you were surely often taught to save, especially if you wanted to buy something you had your eye on; you had to save up first. Even so, saving is very important and is a key part of any financial strategy, especially for the benefits it brings in the future.

When payday arrives, you surely feel very happy, right? You can pay installments and treat yourself and your family. The way to manage your finances when you receive your salary is to make a list of expenses and sound financial decisions.

The priority is to set aside income for essential monthly needs, such as housing, food, transportation, installments or debts, and internet costs. After that, you can set aside around 10-15% for savings, money for unexpected needs, and only then treat yourself.

Rather than only saving in an ATM or a dedicated savings account, a financial strategy can also involve investing. You can choose to invest in stocks or important commodities such as precious metals and oil. Investment returns cannot be enjoyed immediately, but the profits you share will be felt in your later years.

Saving Money by Controlling Spending

Beyond saving for retirement, another equally important preparation is controlling your spending. You may already have divided your money at the beginning for things like daily needs, transportation, and so on. But have you ever monitored every rupiah you spend?

To control your finances, you must record all of your expenses in detail. For example, from the morning you spend money on breakfast and something to drink, then in the afternoon a coffee, and on the way home you stop to buy a snack from a roadside vendor, and so on. Say, for instance, that eating out costs IDR 35,000. What happens if this continues day after day?

Small expenses like these must still be considered. If they continue and become a habit, you can calculate that the total over a year is quite large, right? Of course, treating yourself occasionally is fine, but it is better if you think it through.

Your financial strategy will become even more effective if you keep a note listing your income and expenses. In this modern age, there are many smartphone apps that can help you record all forms of daily income and spending. That way, at the end or beginning of each month, you can see where your money has gone and which types of spending need to be controlled.

Dare to Start, Don't Wait for Success to Arrive

When it comes to success, there are many different views. Some believe success means having a lot of wealth, having a guaranteed retirement, and so on. Success can even be simpler: when you feel grateful for your achievements and your efforts or work are able to meet your family's needs.

Saving for retirement does not require you to first accumulate a lot of money, or to wait until you are known as a wealthy and successful person. If you keep postponing, it will never succeed. Why is that? Because people often feel unsatisfied, so they feel they lack something even when they don't.

That is why you should start right away with small steps for your future. Allocate money for savings, or even cut back on your daily spending. For example, if you have set aside IDR 50,000 for daily food, spend only IDR 40,000 and save the rest.

Even as a millennial, you can look for new ways to save for retirement, such as through investing. As explained earlier, investing is well suited as a fund for your old age and even for your children and grandchildren. It does not have to be a large amount; you can allocate 20 to 50 percent of your savings to investments.

Start now, that is the key. None of these plans will succeed if you keep delaying. Starting to save or invest is indeed quite difficult, especially when there are many wants or dream items you desire. Rather than indulging your desires, it is better to use the leftover income to pay off debts and set it aside as an emergency fund.

Avoid a Luxurious Lifestyle and Prepare an Emergency Fund

When you have more money or become successful, naturally there are more things you want or wish to buy, such as a luxurious house, a car, bags, shoes, and so on. This is not wrong, especially since a house and a car, among other things, are needs for you and your family.

Once all your needs are met, reducing a luxurious lifestyle becomes very important. Imagine how much you could save by not buying a new car, for example, when your previous car is still quite new. Sometimes a luxurious lifestyle is simply about satisfying pride. Pride is never fully satisfied, so you can get caught in a situation where you feel your future will always be fine. That is why you should think carefully again and again about whether the money you spend is for meeting needs or just for self-indulgence.

It is better to save that money in an emergency fund. Why is an emergency fund part of a financial strategy for saving for retirement? Because you never know what will happen in the future. You or your family could face misfortune, or your business could run into hardship, and so on.

That is why preparing an emergency fund is so important for unexpected expenses. On the other hand, part of your money can also be invested in a business venture, such as opening a food stall, a café, a boutique, and so on. Starting a business can also be one of the best ways to prepare for your retirement.