Personal Financial Planning: Why, What, and How

Money, Sex, Political Choice: Which one is the most taboo topics to discuss today?

Well, income is one of the weirdest things to share, not only because of sentiment about income level, but also it is questioning ability to manage your personal income. Then, personal financial planning is very crucial at least to manage monthly spending for saving opportunity to the financial investment decision. If the question is why we need personal financial planning because of its nature, as sensitive thing (personal) and its lifelong needs, everyone should learn for their study, marriage, children education, until retirement plan. The objective is not only being wealthy after applying financial planning in life, but also understand and able to incorporate it as strategy to reach certain goals.

What is Personal Financial Planning? Simple thing to answer is how we see money and grow to achieve financially freedom/specific objective. There are two things as perspective to see the money, it’s about how much we earn (revenue perspective) vs how much we save/invest (cost perspective). Personal Financial Planning tend to bridge two different perspective. There’s no true/false question about this, the next question is how we start to apply personal financial planning in our life.

START SMALL AND EARLY. It’s also applicable for financial planning as well. Save and invest earlier even if you are still in young age and having single digit income (5-10 million IDR). The most important thing is not the nominal (IDR), but the percentage of income (%) as willingness to start is more appreciated. 10% is the minimum percentage of income allocated for saving/investment, but higher better moreover for those who still haven’t dependent (30%-50% from monthly salary). Start small means that we can learn and apply from small scope of financial planning, to avoid confused because of too many theories digested without any action.

DON’T FOCUS ON HIGH INCENTIVE BUT IN SHORT TIME. This is more related with the investment decision. We often attracted by portofolio that offers high return (%) and think instantly to invest. The most critical point is not about how many times/% return gained from your money allocated for saving/investment, the priceless part is the journey, how we experienced as the real investor to develop/improve our skill. At the end, we can’t always be a rookie investor who triggered only in high return portofolio and just being temporary investor, persistence is required. For example, before we start to build own portofolio in stock market, we need to do research: 1) Top down, understand Indonesia fundamental economy first, industry prospect (that’s why we need business economics) and 2) Bottom Up, analyze company business performance through financial ratio analysis

UNDERSTAND THE CONCEPT. Which one to start? Focus is the key. Understand the concept is needed: read more books, know the basic concepts, for example for investment we have two big categories: bond (debt) and stock (ownership/partnership product). It’s better to know just one/two but deep rather than know everything but in narrow. You can start by just pick one, either stock/bond, then learn in depth for certain stock/bond product (you can start by looking only for 1-3 as best stocks option to invest).

There are a lot of references, portofolios, and platform to support our willingness to apply personal financial planning. We can start to do right now.


30 Days of Lunch: Investing in Your 20s with Aakar (Jouska)

Rich Dad, Poor Dad: Robert Kiyosaki


Accenture, Technology Consultant
Specialized in Enterprise Performance Measurement (Dashboard, Reporting) and Digital Initiatives
Industry Experiences: Mining, High-Tech, Consumer Goods
Ikastaran, FEB UGM'11

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