FAMILY is a valuable treasure. Therefore, preparing a better financial future can be one way to show love to your loved ones.
Not only by saving and investing, self-protection and assets also need to be planned carefully. Starting from knowing financial goals, managing expenses and income, and diversifying investment portfolios.
Don’t forget, sometimes life gives many surprises so choosing the right insurance needs to be prepared as a form of love for the sustainability of our family’s life. Therefore, financial management according to sharia can help people prepare finances in facing various risks to protect their families.
Director of Sharia Business Unit of Maybank Indonesia Romy Buchari said, “Sometimes in financial management, we focus on collecting funds and saving, but forget regarding the importance of protecting ourselves and our wealth. Through sharia financial management with its five main pillars, including Wealth Preservation, people can now have access and convenience to various banking products that are in accordance with sharia principles to maintain asset value and protect themselves and their families, not only while in the world, but also until we die. That way, we can keep the family’s financial condition stable and prepare for the future of the family left behind better.”
Here are 5 tips to keep your family’s financial condition stable:
1. Effective and wise debt management
Amidst the challenges of the global economy, a strong foundation is needed to protect family finances. This can be done by implementing one of the main principles of Islamic financial management, namely avoiding unnecessary debt.
Also read: Tips for Managing Finances for Families with a Fixed Income
Prepare effective debt management, ensure the installment to income ratio does not exceed 30% by prioritizing productive installments over consumptive installments to maintain the family’s long-term financial condition.
Don’t forget to always pay your debts on time and consider carefully before making a purchase, so that the monthly installments that must be paid will not disrupt your monthly cash flow and your financial goals can be achieved faster without having a debt burden.
2. Set aside income for emergency funds
Also read: Learn to Manage Finances While at Home
Emergency funds and savings are two different components in financial management. If savings are intended to realize certain plans or needs in the family, both short and long term, then emergency funds are money that is specifically collected to meet urgent needs in the future.
As a form of anticipation and protection for your family, set aside a portion of your total monthly income into an emergency fund allocation.
Ideally, before starting to invest, people should have an emergency fund of 3-6x their monthly routine expenses so they can prepare their finances when faced with an undesirable situation.
Also read: Family Office in Indonesia, Sandiaga: Its Nature is an Opportunity for Additional Funds
3. Diversify your investment portfolio
Portfolio diversification can be the right step to minimize risk factors in investing, including the possibility of a decrease in asset value in the future.
When making investments, the level of risk is always directly proportional to the growth of returns.
Therefore, portfolio diversification needs to be done by placing investment funds in various different sharia investment instruments.
By choosing more than one type of investment instrument, people can get more balanced results and maximize profits.
4. Prepare pension funds for a prosperous old age
Equally important is preparing a retirement fund for old age. By setting aside a portion of your income early on, a prosperous retirement can be realized without affecting your financial condition and burdening your family in the future.
As funds that are collected over a long period of time and will only be used later, find long-term sharia investment instruments that suit your needs and risk profile to build retirement funds, such as mutual funds, sharia bonds/sukuk, and sharia stocks will help achieve the retirement funds needed when needed later.
5. Choosing the right life and health insurance
After debt, emergency funds and investments have been properly managed, people’s daily lives are inseparable from various risks that can affect their financial condition.
Although risk cannot be eliminated, it can be minimized by choosing sharia insurance that suits your needs. Health insurance can help keep finances stable when a family member is sick, while life insurance supports financial conditions if left by the breadwinner in the family.
Currently, sharia insurance also offers many advantages, such as protection up to the age of 100 years and the option to donate the insurance money, providing goodness for now and in the future.
Protection is one way to protect savings, investments, and family financial budgets from expenses due to unexpected events, so that the family’s financial goals can still be achieved as expected.
In order to help the community manage their finances according to sharia, Maybank Indonesia through the Sharia Business Unit (USS) has launched the first Maybank Shariah Wealth Management (MySWM) service in Indonesia.
As a comprehensive financial solution, people can now meet various financial needs at every stage of their life journey through five paths of goodness, namely wealth creation, wealth accumulation, wealth preservation, wealth purification, and wealth distribution. (Z-1)
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