LSP, Millennial-style Financial Management Method

Method of Financial Management, Living - Saving - Playing. (LSP) 

     Have you ever heard the comment "You shop all the time, when can you save?" Or have you ever felt redundant because you bought a branded item that you've been wanting for a long time?

This is a sign that you still think that the path to financial stability is to eliminate entertainment expenses. So that in order to achieve long-term financial goals, we must “suffice” and not pay attention to personal pleasures in the present. A lifestyle that reduces consumptive spending and maximizes savings is called frugal living.

Extremely frugal lifestyles can be stressful and cannot be done sustainably. In a more extreme application, a person can endanger his health if he continuously neglects nutritional and entertainment needs for the sake of frugality.

During the development of the digital world, the millennial generation is a transitional generation that is experiencing a change in work patterns in order to catch up with this development. A computerized work environment, more active work communication and prioritizing soft skills, to the demands to be internet savvy so as not to be left behind by the advancement of the digital industry.

These changes increase pressure and expectations of performance outcomes. The HSE (Health and Safety Executive) survey states that the number of workers who experience stress due to work pressures reached 44% in 2019.

The stress factor of work increases with job uncertainty, fluctuating workloads to concerns over health insurance, adding to the list of thoughts every night before you go to bed.

Is it still relevant to use the principle of Earn + Save + Invest = Wealth by forgetting what is important for your mental health, namely playing in the current era?

How do you keep the funds to have fun and indulge yourself without jeopardizing your overall financial future?

Is it possible to have an emergency fund and savings while still planning a vacation abroad?

It's time to get acquainted with the LSP financial management method or the abbreviation of Living - Saving - Playing.

This method divides financial posts into three parts, namely: - living (including installments and debts other than clothing, food, housing),

- saving, in the form of saving and investment, and

- playing, a special post for personal pleasure, including your holiday dreams.

You can divide your monthly income by a ratio of 50% for living, 30% for saving and 20% for playing. For example, with an income of 10 million, you still have a "playing" cost of 2 million rupiah.

Simple financial management like this can help control spending so that it is maintained in its respective portions.

The next step after understanding the ratio of financial posts with the LSP method is financial records.

Make books for living and playing posts, 30% automatic saving posts cannot move. Starting from getting used to making mental notes before making a purchase or monthly payment, then writing it down in a simple credit-debit balance.

Financial records are important in financial management, because this will make it easier for you to carry out financial reviews on a regular basis. In addition, financial records also function as a control for unexpected expenses.

There are also special tricks to facilitate the flow of finances. Everyone is advised to have 3 digital accounts that can facilitate monthly financial management.

- Savings account with ATM and debit card: used for daily expenses. Payments for various bills should be made by transfer from this operational savings account.

- E-wallet: used for small expenses and snacks.

- Account to accommodate investment funds before being divided for emergency funds and investments.

By not mixing the three LSP posts into one main account, you will find it easier to make notes regarding the available space in each post.

LSP method also makes it easier for you to learn to have emergency savings and investment savings for long-term goals.

If you have often found it difficult to maintain consistency in managing monthly finances, you can apply this LSP method for the convenience of life, and help achieve the financial goals you want.