Soon it will be 2024, will you get richer or vice versa? My Money – 15 hours ago

Jakarta, CNBC Indonesia – Can’t believe it, we are now in the last month of 2023. During 2023, there were those who succeeded in increasing the value of their assets, recovering their financial condition, but there were also those who lost their income.

No one knows when a financial disaster will arise. What you can do is be careful, so that you can avoid or minimize the losses you experience.

It would be good for you to check your financial health at the end of the year. Because with this, you can evaluate consumption behavior, savings, and the amount of debt.


As a result, you can anticipate mistakes early on in managing your personal finances well in the future.

So, how do you check your financial health? Here are the steps you can take.

Liquidity Ratio

This ratio is to measure financial readiness to face emergency conditions such as crises that cause income to be interrupted. This ratio is also commonly called the emergency fund ratio.

Liquidity Ratio = current assets : routine expenses each month

Current assets are assets that are easily converted into cash. For example, cash in savings, shares, mutual funds, or short tenor deposits. Ideally, this ratio is 3-6 times your routine monthly expenses.

Debt Repayment Ability Ratio

Debt can be a personal financial disease. When debts are paid too high to be paid every month, it can create new debts that keep rolling in. Finally, the vicious cycle of debt is difficult to break and life becomes uneasy.

This can be anticipated by measuring the level of ability to pay debts as early as possible. The method?

Debt Repayment Ability Ratio = debt paid each month : total income each month

The ideal is 25% to 30%, preferably below that number. If it is more than that, it is better to immediately pay off the debt with a small nominal amount or increase your income.

Then this ratio can be developed by measuring consumer debt alone.

Consumer debt ratio = consumer debt : income

What is consumer debt?

This debt is used for ‘happy-happy’ such as buying clothes, food, plane tickets, hotels, and others that do not include mortgage or vehicle installments or business (productive) capital. It is very good if the value is 0% so that the financial burden is not heavy.

Cost To Income Ratio

Next is the ratio to compare the costs of daily necessities incurred each month compared to the costs of income each month. Ideally, this ratio is equal to one, meaning that income can cover all daily expenses.

Cost Ratio: Monthly Cost Requirements : Monthly Income

However, it would be very good if it could be less than 1 or 100% because the remaining money can be used for savings, insurance, emergency funds and investments. Even for social or leisure. In this condition, the ideal expenditure for daily needs is 40% – 60% of monthly income.

To maintain this ratio so that it remains ideal or if you want to reduce the ratio, you can do this by saving money or increasing your income.

Savings Ratio

Saving needs to be done to purchase future needs or finances. Saving is not only in banks, but can also be done in deposits or other investment instruments.

Savings Ratio: Total value of savings : annual income

Ideally this ratio is 10%, it would be better if the value could be more than the minimum so that finances are healthier.

Solvency Ratio

If you want to measure how sensitive your personal finances are to being trapped in bankruptcy, you can use the solvency ratio. This ratio compares wealth with total assets owned. Net worth is obtained from all assets including liquid and long-term assets minus total liabilities.

Solvency Ratio: Net Worth : Total Assets

Ideally this ratio is 35%, if it is bigger the better because the portion of debt in assets is smaller and this means the amount of expenses will be reduced.

Apart from the five ratios above, to face the turmoil of 2023, it would be better to be equipped with insurance as a safety net when unexpected events occur that stop productivity. At least you don’t need to pay a lot of money to go to the doctor or hospital or repair shop. Because the costs are covered by insurance.

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2024 is coming soon, are you sure your financial health is healthy?

(aak/aak)