What is money management? How to manage your money?
To put it simply, when you need to buy some goods, but you don't have enough money at hand, the process of obtaining corresponding funds through your own continuous efforts is financial management. In a word, the action goal of financial management is to plan your income and expenditure reasonably according to the scale of your assets and time, so as to maximize your income. The ultimate goal of financial management is to achieve financial freedom in your life, so that the income from your non-work services can meet your daily needs and you can live well without working. Key to financial management: Invest in advance and spend later. Deferred spending has been covered in the spending class, especially for goods that depreciate fast. As for investing, we'll focus on that next. But remember, save early and invest early. This is definitely the first rule! Understand financial investment, have to say is the risk, after all, even if the product is a steady profit, but the relative risk is much lower, can not completely avoid the risk. Risks are generally divided into two types. One is that investment returns are less than the rate of currency depreciation. Although you are making money, the money you earn cannot keep up with inflation. The second is a loss of investment, not only no return but also a loss of principal. Returns are proportional to risks. Some risks can be avoided, but it is difficult to avoid systemic risks and fundamental risks, such as financial crisis and war, so losses can only be reduced as much as possible. It is worth mentioning that short-term fluctuations are not necessarily risks, because the results of fluctuations do not necessarily bring losses. If you extend the timeline, the fluctuations are nonexistent or unusually small. The steady income financial assistant divides volatility into three categories. The first type of volatility exists every day and cannot be predicted accurately and effectively. The second type of volatility is caused by broad up and down market movements, which can be guessed; The third type of volatility is caused by fundamentals, which can be predicted by law, thereby avoiding risks and even making use of volatility to obtain benefits. Moreover, timely assessment of their risk level, reference assessment results to buy suitable for their own financial products and products is also very important. So obviously, the result of not managing your money is less and less money, even though you're earning interest on your savings account. Because you didn't beat CPI! CPI (Consumer Price Index) refers to the Consumer Price Index and is an important measure of the purchasing power of money. It's simply the ability of your money to buy a certain product. CPI =(the value of a set of fixed goods at current prices)/(the value of a set of fixed goods at base prices)*100. Anything above 100 is an increase, indicating that the purchasing power of money has decreased. Assuming that the price of the corresponding commodity purchased in 2006 is 2000 yuan, and 2500 yuan is needed in 2016, the CPI of 2016 to 2006 is = 2,500/2000 *100=125, which is an increase of 25%. If your earnings don't increase by 25% during that period, you're actually "getting less" even if your money is going up. Therefore, it is very necessary to invest idle funds in financial management. By increasing the investment principal, investment time (compound interest calculation is amazing), investment rate of return, can effectively improve the income of financial management, beat the growth rate of CPI. The ultimate goal of money management is to achieve financial freedom in your life. Financial freedom will come when you can support your family without working one day. The passive interest income of financial management can support the family expenses, and the need to no longer work for money, can do more of their favorite things. Having a high net worth, maintaining a net cash flow, and having plenty of leisure time is a life that everyone doesn't want. It's always a long process to get to the end goal, to refine the goal and step by step to the final financial freedom. You need to make a list of immediate goals, such as how much to spend on getting married, how much to spend on having children, how much insurance you should buy, etc. Then calculate how long it will take you to achieve those goals with all the money and income you have now. If you can't, you can adjust your goals. After you have a clear goal that suits you, the next step is to realize your practical goal. You can choose different combinations of financial products according to your needs. If you don't know enough about financial management, you can also look for appropriate financial planners to complete the investment plan. Find it difficult? Something like that? No, no, no, financial management focuses on the cognition and understanding of oneself in the process of financial management, so we must take action to realize the hardships and fun of financial management. You will find that in the end, you will not only learn to manage money, understand your needs more clearly, but also reap a lot of wealth! This may be the best wealth that money management can bring us.