Financial Management

This post isn't about the whole business of financial management; it's rather about my way of managing my own finances. Whatever you do in this world, almost certainly you have to deal with money, simply because the monetary system is firmly built in most societies. You can be an artist or a paleontologist, creating astoundingly beautiful works of art or making groundbreaking dinosaurian discoveries, but you'll still need money to survive on this minuscule cosmological speck of dust. Failing to make money AND sustain its existence would result in the eventual demise of the person in question, hence the super importance of financial management.

It is actually a colleague of mine who inspired me to create this piece of writing. A few days ago she unexpectedly asked me how I manage my finances. I did my best to explain it and she seemed to find my tips helpful. So, I thought to myself, "Why don't I share it with my blog readers?" And the rest is history.

Someone said that however much you earn, you are sure to have financial problems if you can't manage it. And I couldn't agree more with that. Having one million dollars is useless if you live a lavish, spendthrift lifestyle, whereas (depending on where you live) 400 USD may be enough to fulfill all your needs for one month. So, the first and most fundamental 'rule' is to change your mindset. Do you really need what you want to buy? Or is it just a mere whim, which would result in lamentable wastefulness? Having the 'right' attitude towards money is absolutely crucial.

Then comes my strategy for better organizing my money. For me, payday is not payday. (What the hail did you say, Q-Man? You ask.) The day when I receive my salary is just like any other days of that month, which means I won't spend it like crazy. I think of myself as earning an equal amount of money every day (or being paid daily) and that entails dividing my salary into roughly 30. This 'smaller salary' is then reduced by my daily fixed expenses (things like rent and my mom's share). And ta-da! That's how much I have for a particular day. Every day I try my best not to spend more than my 'right' – the less I spend, the better. Of course, there can be occasional bursts of spending but they should be limited and justifications must be provided if they occur.

To minimalize spending, I pay close attention to two key components: transportation and sustenance. In my experience, these types of expenses can bloat spending in an invisibly insidious way, so to speak. My normal transportation expense for a single working day is 7,000 IDR (round-trip bus commute), which means, assuming there are 20 working days in a month, I spend 150,000 IDR monthly. If I were lazy and opted for online motorcycle taxi transportation, I would spend roughly 40,000 IDR per day, which amounts to around 800,000 IDR per month! The difference is insanely huge! (Actually, I did use the more expensive travel option when the pandemic was much worse, because, well, it was the best choice available – health matters.) And this is not to mention food and drinks we consume. I hope this can give you a good sense of how our income can be 'stealthily' gnawed on by things sought by our pleasure-obsessed selves.

Does that mean I don't spend money on things like hobbies and interests at all? Of course not. I also allocate a monthly spending money budget – mostly for books. However, it is important to set a healthy and reasonable limit to ensure our continued existence on this planet.

Sticking to this scheme, I would manage to save a sizable percentage of my salary, which largely goes into my emergency fund – this should NOT be forgotten because who knows what is in store? There are innumerable things outside our control (pandemics are a good example), so it is certainly prudent to anticipate any trials or tribulations.

That's all for now! What do you think of my money management? Is it similar to yours? If not, would you like to implement it? Share your thoughts in the comments section below!