Indonesian Financial Authorities Promote 3M Principles for Smart Financial Management

Enhancing Financial Literacy and Investment Wisdom

Indonesian financial authorities are emphasizing the importance of smart financial management through the 3M principles. Senior Deputy Governor of Bank Indonesia, Destry Damayanti, highlighted that the three key elements are crucial for young generations to manage their finances effectively.

1. Digital Literacy

The first principle focuses on understanding digital financial platforms and instruments. Authorities stress the importance of comprehending one's risk profile before investing and prioritizing officially licensed instruments. This digital literacy helps investors navigate the complex financial landscape and avoid illegal financial activities.

2. Early Financial Planning

The second principle emphasizes the need for early financial planning. This includes creating emergency funds to cover 3-6 months of living expenses and avoiding consumer debt. Farid Azhar Nasution, Vice Chairman of the Deposit Insurance Institution (LPS), advises starting to save and invest surplus funds in well-understood business instruments after securing sufficient liquidity reserves.

3. Long-term Investment Mindset

The third principle encourages investors to adopt a marathon runner mentality rather than seeking quick gains. Masyita Crystallin, Director General of Financial Sector Stability and Development at the Ministry of Finance, notes that significant returns typically come from long-term investments. Investors are advised to consider their risk profile, investment period, and diversification strategy.

Regulatory Oversight and Investor Protection

Irhamsyah, Head of the Directorate of Behavioral Supervision at OJK, emphasizes the importance of verifying that investment products are licensed by relevant financial authorities. OJK has established a special task force (Satgas PASTI) to combat illegal financial activities that pose risks to both consumers and financial system stability.

Building Financial Resilience

The 3M principles collectively aim to enhance financial resilience among Indonesian investors. By fostering digital literacy, promoting early financial planning, and encouraging a long-term investment approach, authorities are working to create a more stable and sophisticated financial ecosystem in Indonesia.