Debt repayments should not exceed 30 per cent of income

Financial planner Rista Zwestika, CFP, WMI from the financial education and consultancy platform Finante.id, advises the public to ensure total debt instalments do not exceed 30 per cent of monthly income to maintain a healthy and stable financial condition. According to her, an excessive proportion of debt repayments can reduce an individual’s ability to meet daily living expenses, save, invest, or prepare an emergency fund.

“In general, total instalments should not exceed 30 per cent of monthly income,” Rista stated when contacted by ANTARA on Monday. She explained that this limit provides sufficient room for individuals to allocate income to various other financial needs, including daily living costs and long-term financial goals.

Rista noted that maintaining a balance between debt obligations and other necessities is becoming increasingly important amidst economic uncertainty and the potential rise in the cost of living. She warned the public to be vigilant if the proportion of instalments approaches or even exceeds 40 per cent of monthly income, as such a condition can narrow financial flexibility and increase the risk of financial hardship during economic shifts or income reductions.

Furthermore, Rista emphasised that individuals must comprehensively account for all forms of payment obligations—ranging from mortgages and vehicle loans to credit cards and digital financing services such as ‘paylater’—before taking on new debt. This approach aligns with healthy debt management principles to ensure financial burdens do not exceed repayment capacity. In addition to monitoring instalment amounts, she noted that the public should continue to build emergency funds and set aside portions of income for savings and investments to ensure long-term financial resilience. According to Rista, wise debt management does not mean avoiding instalments entirely, but rather ensuring that obligations remain within safe limits so as not to disrupt essential needs or future financial objectives.