Many of Jagoans may be familiar with the Eisenhower Matrix. The Eisenhower Matrix is often used as a guidance in deciding work priorities. But apparently, the Eisenhower Matrix can also be used when allocating your monthly budget.
Monthly Budget Allocation With the Eisenhower Matrix
1. Urgent and important
In deciding work priorities, something urgent and important must be completed now or as soon as possible. If not done immediately, there may be consequences.
Likewise when you are doing a monthly budget allocation. In general, urgent and important needs are short-term needs that must be met and are routine. Urgent and important needs must be prioritized.
What are some examples of needs that fall into the urgent and important category? Payment of monthly bills such as electricity, water and internet. If you don't pay, you won't be able to enjoy the service. Not to mention the fines that must be paid if you have not completed the payment.
Types of expenses that are also included in the urgent and important category include house rent, transportation, groceries and household needs.
2. Not urgent but important
When there is work that is not urgent but important, you need to ensure that the work is scheduled to be done. It's just that the deadline for completing the work is more relaxed or flexible. It doesn't have to be done tomorrow or next week, but it still has to be done.
It’s the same with budgeting. Examples of needs that are not urgent but important are building an emergency fund and working towards various financial goals.
Building an emergency fund by setting aside money to save consistently every month is an important thing to do. As long as you are consistent and disciplined in building your emergency fund, you will be greatly helped when something unexpected comes your way.
The same goes for financial goals. Take for example retirement savings. Saving for retirement is not that urgent that you have to reach the target now, but it is important to do it. If you don't start saving when you're young, then chances are you won't have enough retirement savings.
3. Urgent but not important
What are expenses that are considered urgent but actually not important? These expenses are closely related to wants.
Wants such as going to the movies and having dinner with friends every week are urgent. Urgent because it matters for your wellbeing. And, it is necessary to do from time to time.
However, if you really think about it, these expenses are actually not important when compared to paying monthly bills and building an emergency fund.
You still need to allocate a budget for urgent but not important expenses. Why? You can find out the reasons in the article Why Do You Need to Allocate a Budget for Self-Indulgence?
4. Not urgent and not important
When facing something that is not urgent and not important, what do you do? You don't have to do anything, actually.
Indeed, you do not need to allocate a budget for something that is not urgent and not important. But unfortunately, some expenses often fall into the not urgent and not important category
When doing grocery shopping at the supermarket, for example, you may see discounts for products that are not on the shopping list. In the end, you also buy the products that are being discounted. In doing so, you have spent money to buy something that is not urgent and not important.
For this category, you need to monitor expenses regularly to minimize overspending or ensure your spending sticks to the budget.
What is the Percentage of Monthly Salary Allocation?
Based on the Eisenhower Matrix above, you can start categorizing expenses or needs according to type. There are several monthly salary allocation methods that you can choose according to your needs or according to your wishes. One that is quite popular is the 50 30 20 principle.
What is the 50 30 20 principle in managing finances?
According to the United Nations Federal Credit Union, in managing your finances you can allocate 50% for needs, then 30% for wants and 20% for savings.
What percentage of money should you save from your salary?
If you want to try the 50 30 20 principle, then the answer is that 20% of your salary or monthly income must be allocated to savings.
What if you want to have several savings for different financial goals? Once you know the amount you have to save (20% of your salary), you can divide it again according to the financial goals you want to achieve. However, the amount does not have to be the same per goal. Emergency fund savings, for example, can be prioritized over other savings.
One Step Better at Managing Budget with Jago
You already know about the Eisenhower Matrix, now it's just a matter of putting budgeting into action.
For practicality in budgeting, you can use the Jago application, which is owned by Bank Jago. Separating needs can be done by creating a number of Pockets. You can also personalize the Pockets to easily identify them.
Creating a Jago Pocket is the same as opening an account. You can create a lot of Jago Pockets. In other words, you can have a lot of accounts with Bank Jago.
To allocate a budget into the Pockets, you only need to move money from the Main Pocket, which is usually the source of funds. If the main source of funds is not from the Main Pocket, you can choose from another Pocket where funds are available.
Don't have the Jago application yet? You can download the Jago application here to be one step better at managing your monthly budget.
