Advice Family Finance

In the language of the family finances, "time is money". If you postpone financial decisions that must be taken then it can damage you but if you do it early, it can give welfare. Is that it? All decisions in your hands.

Ric Edelman, a reliable financial planner from the United States, mentioned in his book titled The Truth about Money, at least there are four major issues that make people fail to create a prosperous life as they expect, namely:

1. Attitude procrastinator;
2. The habit of spending;
3. Inflation continued to increase; and ...
4. Taxes

The first two things mentioned Edelman is more a matter of personal / private, while two other things can be said as a matter of "social". Or can also be said that the first two barriers are factors "internal", while the other two are "external".

Factor "internal" must be addressed and resolved at the personal level. Attitude procrastinator financial planning is the main factor not achieved prosperous life in the future. Financial planning to postpone the costs of preparing the children's education, for example, can have a bad impact when viewed in the long run. As a result, the children who we love just might lose the opportunity to enjoy the learning process in the institutions of good quality due to limited funds. In terms of preparation as well as pension funds. Those who did not prepare well in advance - ideally within the period 30-40 years before retirement is - may be troubling the other party (whether family or government) in the future.

In contrast to the factors "internal" which is more of a personal responsibility, factors “external” related to social and economic conditions of a country? Not many people can affect the rate of inflation and dealt with the issue of taxation in a country. This is influenced by many factors poleksosbudhankam very complex which can even exceed the ability of a government because of the relationships in scale until the international regional-global. Which might be performed by individuals in overcoming this is to anticipate the various possibilities that will come up with interesting lessons from past history. This means that, although inflation and taxes we can not control, but we still can determine the personal attitudes toward these things.

Expensive costs to be paid!
Time is the biggest factor in determining the value of money. You name it, you save Rp10 million at 8 percent per annum / net. Within one year of course you would expect the value of your investment will be greater than or worth Rp10 million grew into Rp10.800.000. If you save it under a pillow, then the value of Rp 10 million will still be worth Rp10 million a year. In fact, probably less because of inflation.

The most important findings in the financial history is compound interest (compound interest). The principle of compound interest is, the interest generated from investments will be added back to the initial investment and interest back. So the results you get in the years to come not only from the initial investment you place but also from interest earned for the money invested.

Let's look at the actual calculations. Like the example above, if you're saving for Rp 10 million at 8 percent per annum / net. One year to the next value grow Rp10.800.000. You continue to invest. Once the second year running, then you will get another 8 per cent profit, but not from the value of Rp 10 million but the value of Rp10, 800,000 or at the end of the second year you will investment  values increase to Rp11, 664.000. The longer the investment period the value of your investment will also increase in line with interest rate calculations.

Whatever rate you get from investments made, the time will provide the level of extraordinary returns. But with interest rates higher by one point only, the value of which may be obtained profit would be much increased.

25-year-old Turiji, Yudi 35 years, and Efriyaldi 45 years. For their retirement is 55 years old. See the development of investment they do every month a number of Rp1 million with an interest rate of 8 percent. In real life, the tax impact and reduce the amount of benefit that you can get.

It was clear from the table above; the price to be paid due to delay is very expensive habit. If you delay 10 years (your current age 25), with an investment value of Rp 100 million and the assumption of 6 percent interest, at the age of 55 years, you only get funds around Rp320 million. If not you can get a delay of about Rp574 million.