Individuals who are married often show increased financial awareness due to the additional responsibilities that come with being in a partnership. Transitioning from living independently to a shared commitment—especially for men, who are traditionally expected to provide for their wives—significantly expands the scope of their responsibilities.

A report from the Institute for Fiscal Studies breaks down average household expenditures into three main categories:

• 47% is allocated to essential needs such as groceries, utilities, mortgage payments, taxes, and rent.
• 25% is spent on activities and services that were discouraged or restricted during the pandemic, such as travel, dining out, and leisure.
• 28% goes toward miscellaneous expenses like clothing, footwear, and household supplies.

Each household has its own financial structure. This structure varies depending on the needs and income levels. Regardless of how it’s divided, household finances must be managed to remain under control.

Read: Effective Ways to Save IDR 100 Million in One Year

How to Effectively Manage Household Finances

Regardless of how much or how little income you have, poor financial management can lead to waste or even financial problems. Here are some effective ways to manage your household budgeting:

1. Set a Financial Budget

Start by creating a monthly budget. This structured approach makes financial management more focused and clear, helps prevent oversight, and ensures you understand both income and household expenses.

2. Track Expenses and Income

Keep continuous records of all expenses and income—it’s a crucial part of household budgeting. Use modern tools like finance tracking apps to eliminate the hassle of traditional bookkeeping. These apps offer templates and features that improve your financial record-keeping.

3. Develop a Financial Strategy

Once you have a cash flow record, develop a long-term financial strategy. Just like planning a journey, a financial strategy acts as a vehicle to reach your goals.

Everyone has different financial goals. For instance, if your goal is to own a house by age 35, plan carefully and take steps early on to make that dream a reality.

4. Apply the 50/30/20 Salary Allocation Method

This widely known formula serves as a practical guide for managing finances, helping to allocate income effectively while minimizing unnecessary expenses. The key is prioritizing spending.

• Allocate 50% of your income for essential needs like groceries, utilities, transportation, and other necessary monthly expenses.
   
• Allocate 30% for personal desires and recreation—this includes expenses like entertainment subscriptions, social events, fashion, and skincare products.
   
• Reserve the remaining 20% for savings, emergency funds, or investments. This ensures wise use of finances and prepares for unexpected expenses. The method promotes smart budgeting and helps cultivate a habit of saving.

5. Understand the Importance of Prioritization

Another effective way to manage monthly budgeting and avoid overspending is by understanding how to prioritize. Limited income naturally creates constraints on spending. That’s why this understanding is vital.

Distinguish between urgent, essential needs—those that cannot be delayed—and less important wants that can be postponed. For example, allocating money for a mortgage payment should take precedence over dining at a trendy restaurant. This kind of wisdom ensures resources are spent on critical needs, maintaining financial stability and responsibility.

Read: How to Save Effectively Without Sacrificing Self-Rewards

6. Limit Installments or Debt

Taking on too many installment payments can lead to financial strain. Your monthly income will be reduced, as a portion must go toward those payments. It’s important to be realistic about financial constraints.

With limited funds, prioritize important needs and set aside part for savings. Avoid taking on debt for non-essential or frivolous purchases.

7. Cut Down on Office Lunch Spending

Cooking at home is significantly more cost-effective. Try bringing lunch from home to work. Reduce eating out. With just IDR 50,000, you can buy enough ingredients to prepare simple meals for three people in a day. In contrast, the same amount may only cover one meal when dining out.

8. Control Electricity, AC, and Monthly Shopping Costs

Be mindful of electricity and air conditioning use. Use them wisely—turn off lights when not needed. Also, choose affordable brands when shopping for daily needs. While these steps may seem small, they contribute to overall savings and help improve monthly household financial management.

9. Financial Transparency Between Husband and Wife

In marriage, full transparency is crucial—especially when it comes to finances. Always be open and honest when discussing income, investments, savings, debt, and ongoing loan payments.

Avoid the trap of secretly accumulating debt or facing collection problems without your partner’s knowledge.

Start with casual conversations with your spouse to gradually explore each other’s financial situations, creating an open and comfortable environment. Show respect and avoid early judgment when sharing personal financial stories.

10. Make Long-Term Financial Plans

Key components of long-term financial planning include retirement funds, emergency savings, insurance coverage, and funds for purchasing or constructing property. While not all of these need to be in place right away, it’s strongly recommended to secure at least one of them to ensure future financial security.

Creating a household budget requires teamwork with your partner. Manage household finances together to avoid unwanted situations like overwhelming debt or bankruptcy.

Manage your household budget easily with the neobank app. Open a Neo Savings account for daily transactions, or NOW Savings for short-term financial goals. For long-term goals, open a WOW Time Deposit. There’s also a flexible option with Flexi Time Deposit. Maximize your savings with neobank!

Download neobank on PlayStore or App Store now!

For complete information and terms & conditions regarding neobank products, click the following links:

- NOW Savings: https://bit.ly/EdNOW

- WOW Time Deposit: https://bit.ly/EdWebDepositoWOW

- FLEXI Time Deposit: https://bit.ly/EdWebFLEXI

If you want to try neobank products, click the links below:

- NOW Savings: https://bit.ly/EdNabungNOW

- WOW Time Deposit: https://bit.ly/DepositoWOWEdu

- FLEXI Time Deposit: https://bit.ly/EduDepositoFLEXI

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PT Bank Neo Commerce Tbk is licensed and supervised by the Indonesia Financial Service Authority (OJK) and Bank Indonesia (BI), and an insured member of Deposit Insurance Corporation (LPS).