CONSUMER Business Community Manager of Bank Jago Edo Velandika said that most of young people’s financial problems arise from consumer behavior which is not balanced with sound financial management.
“For this reason, the younger generation must be financially literate and learn to manage finances well. You can start by introspecting your lifestyle, then saving or creating budget items based on a priority scale, and finally start investing early,” said Dika as reported by Antara, Sunday. (6/10).
Dika put forward the basic concept of 3F financial management, namely fix, fun, and future, which refers to three budget criteria that must be understood when making financial plans. Fix means separating expenses that are definite or fixed costs, such as food costs, installments or housing rent, and other expenses that are mandatory. This is usually around 50 percent of total monthly income.
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Then, fun, which is an allocation of funds for fun activities, such as watching films or music concerts, hobbies, sports, or holidays or traveling.
“If this budget is issued, it can make you happy, but even if it isn’t, that’s okay too. For this fun budget, try not to make more than 30 percent of your total income,” said Dika.
Lastly is future, namely the allocation of funds prepared early on to meet unexpected needs and something that is long term or for the future. For example, emergency funds, retirement funds, or costs for continuing education. The future budget has at least an allocation of 20 percent of total income.
According to Dika, the most important thing in financial management is not how much nominal value you want to achieve but rather building good financial habits. For this reason, we need to set personal financial targets carefully and realistically, detail and calculate definite or routine budgets, and make budget allocations based on priorities and long-term goals. (Z-6)
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The importance of financial literacy for young adults
Financial Literacy for Young Adults: The Key to Avoiding Consumptive Behavior
As a financial analyst and blogger, I recently came across a thought-provoking article that highlights the importance of financial literacy among young adults. According to Edo Velandika, Business Community Manager of Bank Jago, most financial problems faced by young people stem from consumer behavior that is not balanced with sound financial management. This statement resonated with me, and I couldn’t help but think of the numerous articles and research studies that emphasize the need for financial education among young adults.
The Importance of Budgeting and Emergency Funds
As I delved deeper into this topic, I came across an article from empower.com that provides practical tips for young adults to manage their finances effectively [[1]]. One of the key takeaways from this article is the importance of getting comfortable with budgeting and building up a rainy day fund. This is echoed by the FDIC, which emphasizes the importance of money management for youth, highlighting the need for a bank account to learn about spending, budgeting, and saving [[2]].
Financial Planning for Young Adults
Another article from sfcu.org provides eight financial tips for young adults, which include learning self-control, controlling one’s financial future, knowing where one’s money goes, and starting an emergency fund [[3]]. These tips are essential for young adults to develop healthy financial habits and avoid consumptive behavior. By understanding where their money is going and making conscious financial decisions, young adults can avoid debt and build a secure financial future.
The Need for Financial Education
The article from Bank Jago highlights the need for financial education among young adults. It is essential for young people to understand the importance of balancing their consumer behavior with sound financial management. By doing so, they can avoid financial problems and build a secure financial future. As a financial analyst and blogger, I strongly believe that financial education should be a priority for young adults.
financial literacy is crucial for young adults to avoid consumptive behavior and build a secure financial future. By following practical tips such as budgeting, building an emergency fund, and controlling one’s financial future, young adults can develop healthy financial habits. It is essential for financial institutions, educators, and policymakers to prioritize financial education among young adults, ensuring that they have the knowledge and skills necessary to manage their finances effectively.
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