Five Steps For Personal Financial Management

Personal finance is the process of achieving personal life goals through the management of financial resources. It is a unified and coordinated plan for achieving overall financial goals.

The following three aspects should be grasped mainly: first, financial resources; if we want to do a good job in financial planning, we must first know what our financial resources are; second, we should have a clear understanding of our life goals, and third, we must have a unified and coordinated plan to ensure that all plans will not conflict, and we can achieve coordination.

So what should we do in personal finance? There are five main steps.

First, we must formulate financial targets.

This should be considered in many ways. First of all, this financial goal should be quantified. For example, if you want to buy a house, how much money you need to buy a house, you need to buy a house after five years, or you will buy a house next year. This is a financial goal. If you want to do a good job in financial planning, you must have a concept of time.

Second, to understand your asset status is to see how much money you have.

One is how much assets you have in the past, and how much income you will have in the future.

Are all assets in line with their own needs, are assets and liabilities reasonable, or can some financial leverage be used to make their financial structure more reasonable?

Third, we need to know ourselves.

Preference.

Each person's risk tolerance is quite different. Some people are conservative. Some people are aggressive. There are three ways to measure.

First of all, we should consider the personal situation, whether there is a family, whether there is a support population, how much the expenditure accounts for and so on.

If you have children, your investment should be conservative, because the family responsibilities to bear are different.

Second, consider the trend of investment.

For example, you are very good at stocks, you are very aggressive in investing, and so on.

Finally, we should also consider the orientation of personality.

People with different personalities will make quite different choices when facing some things, and personality determines what behaviors people will have in the process of managing finances.

Fourth, we need to make reasonable decisions.

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First of all, allocate assets well, for example, from a strategic point of view, only 30% of assets are used for stock investment, which is a strategic asset allocation.

Fifth, we must proceed.

Performance management.

It is to arrange the money in the pocket reasonably.

First, it is built on the condition that the income can be maintained normally. If the revenue is interrupted or any accident occurs, the financial management goal will fail.

The two is to plan ahead, otherwise it will be difficult to achieve the goal when the time is approaching. Even the target is not very reasonable; three, the unreasonable asset structure will affect the gain.

If the assets structure is unreasonable, the opportunity of investment growth in the market can not be shared. Other people's money is increasing, and your money is idle. This is the result of good management of personal assets.

In short, we have entered the era of investment, how to invest and manage money, how to make money in our hands to make a good arrangement, so that life management and investment and financial management to achieve a win-win situation has become a concern of many people.

According to the data of developed countries, more than 80% of the families without expert financial management have problems, but after more than 95% experts' financial management, they can be improved.

As long as people spend their minds on managing finances, they believe that their financial situation will have a very good change.