By Fariz Hutama Putra Harjanto, M.B.A.
Faculty of BioEntrepreneurship

In today’s world where everything is just a click away – your favorite salad via GoFood, getting from point A to B with GrabCar, planning your Italian vacation from Traveloka, and shopping for that latest looks from Mr. Porter – it feels like our pockets are not deep enough to satisfy our needs and wants. And that’s just the beginning! Our Instagram feeds are filled with meticulously filtered photos and videos showcasing delicious foods and libations making us secretly whisper “I want it, too!”.

If that sounds like you, don’t worry because you are not alone. According to a 2017 GoBankingSurvey, more than 70% of young millennials have less than US$1,000 in their savings and from my personal observation (and experience) young millennials’ inability to manage personal finance is the culprit of this problem. Some of us know how to manage personal finance but don’t bother to follow, and the rest of us might not know how to manage your money at all.

So, how do manage our personal finance? My experience studying abroad with very strict monthly allowance taught me the three simple steps of personal finance that includes knowing your income and expenses, plan and stick to your budget, and talk about it with someone you trust.

A sound personal financial management is finding the right balance between your income and your expenses. Thus, it is very logical to know how much you earn and spend on a given period of time. For example, you earn US$100 allowance per week from your parents – this becomes your income. List all expenses that you need to cover such as food, telecommunication, entertainment, and transportation and make sure your expenses never exceed your income. If you wish, you may allocate some of your allowance for savings in this step.

Once you know your “purchase power” create a budget. A budget is no more than a list of priorities – what to buy and what not to buy. To illustrate, let’s assume that you will spend US$30 for food, US$20 for transportation, US$10 for entertainment, US$20 for telecommunication, and you want to save the remaining US$20 for future use or emergency fund. If, for any reason, there was any expenses that’s not on your list, then avoid them at all cost – stick to your budget! Frankly, this is the hardest part in personal finance: self-control and consistency.

The very last step in personal finance is to talk to someone regarding your personal finances. Communicate with your friends that you are keeping track on your budget so that neither your income doesn’t get hurt nor are you running out of money before it’s time. If you are on a very tight budget or wanted extra income, talk to your friends and tell them you need additional income to cover your expenses; your friends might have information on that part-time job you wanted!

During my study in the United States, these three easy steps had really helped me in managing my personal finance and live comfortably even on a budget. I could still save some bucks to buy some nice clothes and plan a vacation. At the end of the day, the sooner you start the better off you will be with your personal financial management.

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