Debt Management Tips: Maximum Instalment Portion Should Not Exceed 30 Per Cent of Income

Maintaining financial health amidst economic uncertainty requires discipline in managing debt. Rista Zwestika, a financial planner from Finante.id, advises the public to ensure that total debt instalments do not exceed 30 per cent of monthly income.

According to Rista, this limit is crucial for maintaining a healthy and stable financial condition. An excessive portion of debt instalments risks eroding an individual’s ability to meet basic living needs, save, invest, and prepare emergency funds.

“In general, total instalments should not exceed 30 per cent of monthly income,” Rista stated in Jakarta on Monday.

She explained that the 30 per cent limit provides sufficient space for individuals to allocate income to various other needs, including daily living expenses and long-term financial goals. Balancing debt obligations with living requirements is becoming increasingly important amidst the potential rise in the cost of living.

Rista issued a stern warning for those whose debt instalments approach or even exceed 40 per cent of their monthly income. This condition is considered dangerous as it can significantly narrow financial flexibility.

“If the instalment portion approaches or even exceeds 40 per cent, the situation must be monitored closely because it can reduce financial flexibility and increase the risk of financial hardship when economic conditions change or income decreases,” she added.

In addition to monitoring instalment amounts, the public is encouraged to remain consistent in building emergency funds and setting aside a portion of income for investment. The goal is to ensure long-term financial resilience.

Rista emphasised that wise debt management does not necessarily mean avoiding instalments entirely. Rather, the key is to ensure that every obligation taken remains within safe limits so as not to disrupt basic needs or the achievement of future financial goals.

By keeping debt portions under control, individuals are expected to avoid excessive financial burdens and remain capable of managing cash flow productively.