Page 6 - FLIP BOOK ECONOMIC PROBLEMS AND HOW TO SOLVE THEM BY SELA PUTRI AGUSTIANI

different alternative choices. The greater the amount of a person's income will encourage
him to fulfill his needs according to higher alternative standards.
 Social status and community environment
 A person's social status or role in society can make a difference in determining their
priorities. A person who lives in a luxurious residential area or has a higher social status
tends to have a higher alternative priority scale compared to other areas.
 Family role
 As with social status and community environment, roles in the family can also cause
differences in prioritization. The priorities of the head of a household will be different
from those of a child. The head of the household has a higher priority scale for family
health insurance, children's education costs, or household needs than fulfilling his

personal needs such as hobbies or other desires.
How to Set Priority Scale

In managing finances, everyone must know how to arrange a priority scale from the income
earned every month, so that finances can be controlled properly. There are 5 (five) things that
must be considered first in compiling a priority scale, including: The level of urgency, personal
ability (financial), opportunities owned, future considerations, considerations in shopping.

Benefits of Developing a Priority Scale

Making a list of priorities in managing finances will bring many benefits and help a person avoid
implusive behavior and financial problems, here are 3 (three) important benefits in compiling a
priority scale: Help control finances, fulfillment of needs according to ability, reference to a
calmer life.

E.Definition of Financial Management

Financial management or financial management is planning, organizing, directing, and
controlling financial activities such as procurement and utilization of business funds. according
to Anwar (2019: 5) financial management is a discipline that studies the financial management of
companies both in terms of finding sources of funds, allocating funds, and sharing company
profits. Literally financial management (financial management) comes from the word
management which means managing and finance which means things related to money such as
financing, investment and capital.So if it is concluded that financial management can be
interpreted as all activities related to how to manage finances starting from obtaining funding
sources, using funds as best as possible to allocating funds to investment sources to achieve
company goals.

Financial Management Functions

1. Financial Planning and Budgeting