Manulife Indonesia's 5 Important Reasons to Plan Finances from a Young Age
Planning is one of the most crucial steps in managing finances, especially for the younger generation, says Manulife Indonesia.
According to 2019 data from the Financial Services Authority (OJK), the financial literacy level of Gen Z is at 44%, with the Gen Z population in 2019 being around 72.9 million, which is 27% of Indonesia's total population. This data shows that the current financial literacy level of the young generation is still low, being under 60%. Additionally, OJK revealed that 60% of loans from fintech are distributed to customers aged 19-34 years, predominantly Gen Z and Millennials.
With over 38 years of experience, Manulife Indonesia understands that the complexity of available information sometimes hinders the younger generation from starting to plan their finances. Therefore, Manulife Indonesia has summarized five benefits of financial planning that will surely convince the younger generation to start planning their finances early.
Building Good Financial Habits and Skills Learning to plan your finances smartly is key to managing your money effectively. It helps you make better financial decisions, avoid impulsive spending, and stay focused on long-term goals. Plus, good financial management means you can adapt better to life’s changes and challenges, putting you in control of your financial future.
Preparing for the Unexpected Life is full of surprises. To be financially secure, it’s not just about having enough for retirement or luxuries but being prepared for unexpected events like illness, car repairs, or job loss. Handling these wisely helps prevent debt. Insurance is important in financial planning because it protects you from various risks and uncertainties. When choosing insurance, consider what kind of risks you might face and select the right type of coverage, whether it's for health, life, or property.
Boosting Your Income Once you have a stable cash flow and are prepared for challenges, consider ways to increase your income. Investments can help you tackle financial challenges like inflation and portfolio diversification. However, it's crucial to choose investments that align with your income, goals, risk tolerance, and needs. Besides investment, think about leveraging your skills or talents, like starting a side business or doing freelance work, to boost your income.
Reaching Long-Term Financial Goals Earning from your job or investments brings you closer to your long-term financial goals, such as buying a home, a car, funding your child's education, or preparing for retirement. Effective financial management helps you set and achieve these goals. A good approach is to use the SMART principle for goal-setting: Specific, Measurable, Achievable, Relevant, and Time-bound. This helps create clear and attainable financial targets.
Managing Assets for Future Generations Your financial planning and management efforts can help grow your assets over time. Using strategies like investment, insurance, and tax planning ensures that your assets are protected and can become a valuable legacy. Proper planning is key to avoiding family disputes over assets and ensuring a smooth financial transition in the future.
The goal of financial planning is to make more informed decisions and create a better life for yourself and your loved ones, says Manulife Indonesia. It's about understanding your needs, evaluating your risk, and making choices that align with your long-term objectives.
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