Financial management for ordinary people

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Financial Management Explained: Scope, Objectives and Importance | NetSuite

As an very ordinary worker, we may fall into all kinds of traps when we are learning financial management. At the beginning, we seemed to be in a ring track. Our ultimate goal is to achieve wealth growth. And in this track, we will randomly encounter all kinds of emergencies, such as salary payment, entrepreneurial failure, childbirth, natural disasters, loans, and so on. If our income has not been able to exceed the expenses of these emergencies, we will have been running around on this ring track and unable to achieve our ultimate goal. Moreover, the risk tolerance of ordinary people is relatively small, and blindly joining the circle of investment and financial management is likely to collapse by the market.

Financial Management (Bookkeeping) - Centre NGO

So how to make a good start to our financial management? First of all, the most fundamental point is the change of our concept. Many financial views will emphasize the concept of "consumption moderation" in order to save more money for investment and financial management. However, blindly restraining consumption will either lead to our psychological guilt when we consume or buy something necessary, or even eventually become retaliatory consumption. A person's consumption habits depend on their lifestyle, and their lifestyle fundamentally depends on their ideas. In addition to consumption, it is inevitable that there will be some losses when learning financial management at the beginning. Many people give up directly because of the initial loss, thinking that they have no financial management mind. But at the beginning, no one will be smooth sailing, which depends on the personal risk tolerance. Therefore, the first step in learning financial management is to establish a correct financial management concept and change the wrong financial management idea.

The common misconception of financial management is that high income is equal to high consumption. Temporary consumption may bring satisfaction, but it is different from the happiness and security that stable long-term assets such as real estate and savings can bring us. Therefore, first of all, we should learn to accumulate assets and convert unnecessary expenses into assets. However, it should be noted that rational consumption does not mean excessive suppression of consumption. The consumption is consumption, but in the face of some choices, for example, if you have a sum of money, you can use it to buy a car or a house. From the perspective of investment, a house is more valuable than a car.

Characteristics of Financial Management | Biz Manage Info

In addition, an important concept in financial management is to increase insurance allocation. Where there are benefits, there are risks. What we can do is to prepare for possible accidents, such as illness, unemployment, etc., which will impact our financial situation. We can reduce the impact of large expenditures on us by purchasing health insurance, medical insurance and other insurance.

The key to ordinary people's financial management is to find their own financial management methods, adjust their own consumption concepts, break the conventional financial management methods, and have a certain risk awareness and risk tolerance. At the same time, they should also master some financial management knowledge to diversify risks, reasonably allocate their assets, and make reasonable plans for assets.