Budgeting and spending plan are ways of managing finances that many people use.
Why is Financial Management So Important?
Financial management can make finances more organized. Good financial management will also be very helpful in Moneyfesting, where you manifest your financial goals or dreams for the future by using money to make them happen.
To start managing your finances better, you can use a budgeting or spending plan. What is important to know is that the two are different. What are the main differences between budgeting and spending plan?
How to Manage Money through Budgeting
1. Budgeting is a method of allocating money for an expense
Life cannot be separated from various expenses. Some expenses are regular, some are not. Examples of regular expenses are paying monthly bills and buying daily necessities. Meanwhile, an example of non-regular expenses is renovating a leaking roof or wall of a house.
Whatever the expenses or needs, you must have enough money to be able to meet them. This is where budgeting plays an important role to ensure priority needs or expenses can be met first.
Through budgeting, you allocate a certain amount of money for a number of needs. The amount of money allocated for each need is different. Monthly bills, for example, may be allocated less money than your daily food needs for a month. Budgeting also ensures that expenses are not greater than income.
2. The budgeting period can be adjusted according to needs
In general, budgeting is done monthly after receiving a salary. However, you can also budget weekly (especially if you are just starting to learn how to allocate a budget), every 3 months, every 6 months or even once a year, depending on your needs.
To be able to create a budget, you need to track your income and expenses over a period of time. This way, you will get an accurate picture of where the money is going. From the information you already have, it will be easier to allocate funds to various expense categories.
3. The budget for each need is not static so it can be updated at any time
Another interesting thing about budgeting for managing finances is that it can change due to several factors (source: 360 Degrees of Financial Literacy). For example, if you want to save money or reduce expenses because you want to achieve a financial goal, then the budget for entertainment or other wants can be reduced.
How to Manage Finances by Creating a Spending Plan
1. Be aware of and understand your values
Everyone certainly has values. Each person's values may be different. You and your close friends may live this life with different principles. Therefore, to be able to start making a spending plan, you must be aware and understand what values are your current priorities.
2. Set financial goals (do Moneyfesting) based on those values
For example, your main priority is family. From here, you can create a spending plan that revolves around your family. Instead of spending money to hang out with friends from the office every day after work, you prefer to save so you can travel abroad with your beloved family.
Therefore, a spending plan is about what you spend money on, and whether that something is truly aligned with the values you hold. Because value can be more than 1, financial goals can also be more than 1 at the same time.
3. A spending plan may change over time
Something that is certain in life is change, including changes in values and financial goals. For example, considering that your parents are getting older, you want to start taking care of them. This goal may not have previously existed. With this goal in mind, your spending plan must also change because there are some unexpected big expenses when caring for aging parents.
Which is Better for Money Management, Budgeting or Spending Plan?
Because budgeting and spending plan have differences, both can complement each other to make your finances more organized and at the same time you can realize your financial goals.
However, it all comes back to the goals you want to achieve and your current financial condition. If your main goal is to know exactly where your money goes in a month, then budgeting is the right choice for you. However, if you already know the financial goals you want to achieve in the next few years, you can become more disciplined and committed to saving by making a spending plan.
More Organized Finances, As You Want, Using the Jago Pocket
What way would you choose to manage your finances better? Whatever your choice, you can use the Jago Pocket to do budgeting or create a spending plan as you want.
1. Create Spending Pockets in the Jago application to manage expenses
By having a Jago account, you can create Spending Pockets to manage expenses. Weekly and monthly budgeting becomes easier and more practical. Separate expenses by creating a different Spending Pocket for each one.
You can have many Spending Pockets, each of which has its own account number. To pay monthly bills, for example, you can directly transfer money from the Bills Pocket. Or, for automatic bill payments, you can schedule them using the Plan Ahead feature. For monthly shopping, you can use money from the Shopping Pocket. Make sure to allocate a budget to each Pocket according to your needs.
2. Have savings with Jago in the form of Deposits, Locked Pockets or Saving Pockets
To create a spending plan or realize your financial goals, you can also open lots of savings in the Jago application. Choose the Jago Deposit, Locked Pocket or Saving Pocket as you want.
The Jago Deposit, for example, is suitable as savings for long-term financial goals. Save money in a Jago Deposit for 1 year then automatically renew the principal and interest once it matures to ensure that your financial goals are achieved on time.
For those who want to start saving but are still collecting money and are often tempted to dip into savings, you can create a Locked Pocket. Unlike the Jago Deposit, you can add money to a Locked Pocket at any time but you can't use it until the locking period is over.
Another option is to save in a Saving Pocket. Unlike the Locked Pocket or Jago Deposit, the Saving Pocket provides lower interest. However, you can use the money in savings at any time because it is not locked or saved for a certain period.
Whatever way you choose to manage your finances, you can rely on Jago and its features, just the way you want.
