Updated time: Oct 04, 2021, 09:11 (UTC+03:00)
Managing idle funds or personal financial management is always one of the most important issues that anyone needs to be aware of in order to make sound financial decisions in the future. However, not everyone knows how to properly set up their own idle funds management plans. Personal financial management is a very complex subject. There are no absolute management principles or principles that are entirely true.
Therefore, the concept of managing idle funds here can be understood as simple as managing money, arranging to spend, saving plans, retirement plans in a reasonable way. The ultimate goal of this is to make money profitable on its own. In particular, you are the subject who acts as the highest-level manager, has the right to run and decide all the tasks. In this article, DNBC Financial Group will introduce you to some methods to manage idle funds effectively.
First, we must define personal financial management.
Every successful person verifies that every coin is a seed that always offers value. Each of those seeds has the potential to grow into a massive tree. As a result, if you throw away a seed, the tree will never be able to grow. They place a high value on every change they implement and that is how you should manage your money.
The answer is that you rarely set a precise goal for saving. It is difficult to save funds money thoroughly, regularly, and effectively in the long term without a defined cause, a specific objective. This is also why, despite being taught to save as children, most of us do not continue to do so as adults. Also, each objective requires a different manner of saving money; if you don't start with a specific purpose, you won't be able to place every penny of your savings at the proper value.
Over the past decades, people have been changing, great developments in all fields. In particular, financial management tools are gradually updated and changed every day. The process of change is never easy, especially when it comes to habits. The same may be said of personal financial management habits. You may have discovered what expenses to cut after each count, but how can you stay focused and get started?
You need to go through 3 models to form new habits according to the method modeled on stages of behavior change:
The 6-jar method of finance was introduced by T.Harv Eker in his famous book "The Secret of Millionaire Thinking".According to the 6-jar method, your total income will be divided into 6 jars as follows:
Bottle 1 - NEC accounts for 55% of your total income. For example, your total income is 8000 EUR, you need to set aside 4400 EUR to enter the NEC fund.
The money in this jar will be used to pay for daily necessities such as eating, traveling, shopping, living expenses, entertainment, and so on.
The Education Fund - EDu, or The Fund that Invests in Itself, is the second jar. This fund represents 10% of your overall revenue. You shall invest the money in this jar in four areas: health, knowledge, relationships, and self-image.
It is one of the most significant funds since it is the wisest and most lucrative investment because it is invested directly in itself. By measuring, You can raise the Edu fund's portion of overall revenue to 12.15 %.
Jar 3 represents our long-term savings fund (LTS), which amounts to 10% of our overall revenue. Long-term costs include purchasing a home, purchasing a car, marrying, having ten children, retiring, and so on. This fund will be used to pay for it. In addition to paying for long-term costs, the LTS fund acts as a "savior" in instances of hazards, such as illness, property loss, and so on.
Jar 4 is the financial freedom fund, which represents 10% of your total income. Use the money in this fund to contribute company capital, invest or save,... to make money work for you and attain financial independence; the more money you work for, the more freedom you have.
Jar 5, sometimes known as a charity foundation, contributes 5% of our overall revenue. The money in this fund will allow you to help those who are less fortunate in life, such as supporting the poor, assisting poor children in overcoming difficulties, and so on. Or the next best thing is to celebrate birthdays, purchase gifts for family and friends, and so on. "Giving is eternal!" When we give, we do not lose what we give; rather, we receive more. Furthermore, this is a wealth-creation process in each individual's soul.
Jar 6 is the Enjoyment Fund, which represents 10% of your entire revenue. Spend the money in this fund on enjoying life, doing what you enjoy, and doing what you always do to unwind after a long day at work. If you don't use all of the money in this fund, that's fine; you may put it in the Financial Freedom Fund or invest it yourself.
The Kakeibo method is a financial management method originating in Japan." The mother of this method was journalist Hani Motoko (1873-1957), who invented it in 1904.
Over the past 117 years, the Kakeibo method has helped a lot of people make the right decisions and become the bedside tip for anyone who wants to manage their personal finances effectively. The Kakeibo method usually comes in the form of a compact Handbook, which will directly impact our savings-spending process through three parts: Impact Section, Control Section, and Assessment section.
This part, the Kakeibo Handbook, will assist us in planning our savings and expenditures, which are typically specified at the beginning of the month. Take each of the following steps:
Step 4: Using the remaining funds, provide as much detail as possible about the expenses and split them into four parts; the ratio of each portion is entirely up to you.
Food, transportation, clothing, cigarettes, and so on are all necessities.
– Optional: Phone, coffee money, restaurant money, etc.
– Knowledge spirit: Purchase books, documents, periodicals, travel, charity, etc.
– Occurring: Pre-wedding, vegetarian, birthday, conference, repair (auto repair, home repair, furniture repair,...), presents, etc.
The main content of this Section is to clearly re-define what is "Real need" and "Temporary desire" to help us strictly control our spending and savings. To do this part, you answer questions such as:
Each month, compare the amount you plan to spend with the amount you've spent and calculate the difference to see how much you save. If you have negative money or just spend enough, attempt to figure out if there are any wasted, unreasonable amounts of money that you can adapt to next month.
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