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Financial Management: Needs or Wants?

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Financial Management is vital to prevent individuals from overspending and not knowing how to assess the needs and wants in spending. However, to what extent the public is aware on the matter?

Every individual has a family expense management plan, however short and long term planning is vital. With us, Haji Shamsul Bin Haji Muhammad, General Manager, Insurans Islam Taib Family Takaful Sdn Bhd, to discuss more about financial management: Needs Or Wants?

What methods can be applied for wise financial management?

FINANCIAL MANAGEMENT METHOD

"I will share on three methods. Firstly, is the financial statement. Secondly, we have to prepare a budget. Budgeting is a method that can be used to identify where our source of income comes from and where it is spent. And thirdly, an Emergency Fund, which is savings of 3-6 months of our salary."

Why every individual should have a short and long term planning in financial management for expenses?

IMPORTANCE OF FINANCIAL PLANNING

"It should be known that financial planning is a roadmap that can help a person to achieve their financial goal. This is a systematic plan if there is financial plan. There is a direction, if the goal is to perform the Umrah, then this becomes our direction. This means that we have a motivation to achieve the goal."

What are the negative effects of not having a plan in financial management?

NEGATIVE EFFECT OF A 'FREE' BUDGET

"In financial management, it is important to have financial planning as without it, the budget will be overrun. Apart from that, this is also a cause of 'budget leakage' because there is no basis to the things that we should spend on from our income, we tend to spend on what we see."

When a person has financial problems, it can impacted negatively on household. What is your view on this matter?

EFFECT OF FINANCIAL PROBLEMS ON MARRIAGE

"Once we have a family, we should look at our responsibility, especially for the husband to give 'nafkah' or alimony to the wife and prepare the expenditure for the children. Economic problems can result in domestic violence, when the wife or children needs something but it cannot be fulfilled."

Can you share if there are cases that cause a person to bear the burden of excessive debt?

BURDEN OF EXCESS DEBT

"There are good and bad debts. A good debt can be beneficial. But a bad debt is one that only fulfils our personal wants. Debts or loans are sometimes incurred due to peer pressure or marketing. Sometimes the things bought are ones that we do not need."

It is known that the civil servants will soon receive bonus salary payments, what is your recommendation whether to meet needs or wants?

LIMIT SPENDING AND MAKE SAVINGS

"First, we must have a budget. This is for our budget planning. Second, we must have savings. Save at least 10% of our income. After that, list down important items. Look at what should be prioritised."

Prudent and wise financial management planning, makes it easier for us to manage expenses better.

Source: Radio Television Brunei