As a newcomer to financial management, do you look at the salary that has just been recorded, but you don't know how to distribute it? Learning to manage money is to learn to use the resources at hand, immediately see, how to use simple five steps to help yourself establish a good financial foundation!
"Everyone says that life should understand financial management, but what is financial management? How do you 'reason'?" This is a common confusion for many social freshmen and financial novices.
In fact, the so-called "financial management" is to allocate the temporary remaining survival resources in hand.
Just like squirrels, dogs, leopards and other animals will hide the food they can't eat, and then take it out to enjoy when they are hungry, "financial management" is a kind of behavior that humans live in the capital society and know how to plan ahead.
The food stored by the animals has not been eaten for a long time, and it is easy to mold and rot due to weather changes; The money we put in the bank has not moved for a long time, and it is likely to slowly become smaller due to inflation.
Learning to manage money is to learn to use the resources at hand to reduce various predictable and unexpected risks and make our lives better.
So, what are the aspects of financial management that need to be considered? How can I arrange my salary after I am credited?
How to allocate money is also logical, the following five steps to take you to establish the financial order in your heart!
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Step 1. Save an Emergency Reserve Fund to catch your safety net in the event of an accident
First, arrange a dedicated savings account, which can be a convenient one for withdrawals but less frequently used, or a digital bank that offers high-interest live deposits, so that the money lies in a highly active place and can be accessed at any time when needed.
Once the salary is in your pocket, you can save the money you expect to save every month, and you can set the payday to automatically transfer to the account used to save.
The goal of saving can start with a one-month salary and set aside an emergency reserve for at least three to six months' salary. If you want to leave more money for yourself, you can also increase the amount you have set aside as appropriate.
The meaning of the existence of emergency reserves is to shield you from sudden accidents and short-term inconveniences, such as medical expenses after a car accident, or as living expenses during unemployment, so that even if you are in an unstable life stage, you can temporarily maintain a state of independence and autonomy.
For those who own assets, the emergency reserve is also a small guard guarding the investment plan.
Suppose that one day there is an unexpected large expenditure in the family, at this time, there is no need to rush to sell the investment projects such as stocks, bonds or real estate that have not met the expected profits, but use emergency reserves to buffer and reduce unexpected capital losses.
(Extended reading: "Don't dare to leave because you don't have money" Epidemic Finance: Do you know how important reserves are? ）
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Step 2. Priority payments to "fixed expenses" and "debt"
After deducting the money that should be saved each month, give priority to the necessary expenses of the month.
There are two parts, one is the "fixed expenses" that maintain the normal operation of daily life, from rent, utilities, telecommunications bills to credit card bills, insurance premiums, commuter monthly fees, and the other is loans and debts that will have interest pressure.
In addition to living expenses, fixed expenses are also subject to tax liabilities after entering the society.
Individual income tax declaration is required in May of each year; Motorists are required to pay licence tax and fuel tax in April and July of each year, respectively; If you have real estate in your name, you will have home and land tax payments in May and November.
If you are a social newcomer with student loans, or an office worker with repayment pressure such as mortgages and car loans, try to deal with these debts first! Especially from the beginning of the high interest rate, so as not to snowball the repayment amount and finally crush yourself.
In particular, if the credit card consumption is not paid off on time and the circular interest is included, then the credit card bill will become another snowball (debt) that will chase you, which is no longer a simple fixed expenditure, so you must develop the habit of "first have money, then consume".
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Step 3. Looking at insurance planning: Can someone help you spread the big picture?
Save the emergency reserve, deduct the money you need to pay and monthly living expenses, and if you have the spare energy, please start reviewing your insurance plan.
In addition to group insurance such as military insurance, public insurance, education insurance, labor insurance and health insurance, if you can, please build a complete umbrella for yourself and do a good job in personal risk management.
First, find out your existing insurance policy and ask your own family.
Many parents will insure their children not long after the birth of their children, on the one hand, they love their children and want to buy more protection for their children, on the other hand, they are considered for premiums, the younger they are, the cheaper the insurance.
Next, please sort out what types of protection you have, such as general life insurance, necessary accident insurance, medical insurance, actual payment, and corresponding to the common cancer and aging society of modern people, and the corresponding cancer insurance and long-term insurance can also be taken into account.
Many people subconsciously reject access to insurance personnel, worry about being deceived or buy a so-called "personal policy", but neglect the most important thing - to understand their real needs and ability to pay.
Generally speaking, you will feel that you are being treated unevenly, or think that the money to buy insurance is thrown into the water, in fact, it comes from the unwillingness to face yourself and the lack of a good mentality.
Before buying any insurance, please remember to clarify your needs and do your homework in advance, so that you will not make a decision that you may regret because you don't know anything when you negotiate with the salesman.
(Further reading: is the KOL is also the salesman!) Interview with insurance influencer Mia: I always feel like I can be better and don't want to settle for the status quo)
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Step 4. Learn about your investment attributes and build your investment plan
With the financial fortress built in the previous three steps, we can rest assured that we can attack the outside world.
Before we begin, we need to understand that "investing" is not gambling, so no matter what form of investment you are, you must have an understanding of the properties and market characteristics of this type of asset. The so-called "asset" is something that will make you money or bring income.
The first step in developing an investment plan is to decide what you want to achieve – is it for study abroad, a marriage fund, a dream trip, or financial freedom?
According to the length of the target period and the size of the target amount, calculate how much you still have to go, what kind of strategy is suitable for investment, and then start to allocate the asset portfolio.
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Building a portfolio is like building a team that's just for you. Different types of investment targets, such as: stocks, bonds, funds, real estate, cryptocurrencies, they are like talents with different abilities, some have strong offensive power, some have better defensive capabilities, and some have the highest stability.
Before deciding which targets to configure, be sure to understand your investment attributes and evaluate them according to your personality, age, income, and risk tolerance to see if you are suitable for active, stable or conservative investment.
In the process of executing investment strategies and adjusting asset portfolios, it is important to keep pace with the times and understand the current situation.
No one can accurately predict the future, but it is extremely important to keep up with the general trend of the times, and spending at least 10 to 30 minutes a day to understand political and economic current events and industrial dynamics will help improve investment efficiency and reduce unnecessary risks.
(Same scene Jiaying: money and its place of origin | how to calm the loss of investment money? Zero Anxiety Banking 4 Steps)
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Step 5. Accumulate credit assets, the last line of defense
Imagine that you have encountered a low tide in your life, the emergency reserve fund in hand is used up, and the investment project as the second reserve fund has also been realized and spent, but you still need to use a large amount of money. Many people will choose to ask the bank for help, that is, to borrow money.
But why should banks lend us money? How do I decide on the maximum amount of my loan? This is when a person's credit score is very important.
Before assessing whether to issue a loan, the bank will obtain our credit information from the Financial Joint Credit Information Center of the Consortium Corporation, the only cross-financial credit reporting agency in Taiwan. Credit score is made up of a number of factors such as our past payment behavior, personal liabilities, credit length, guarantor information, and more.
A person without a credit score who wants to borrow money is like holding a blank resume to an interview, the other party has no way to judge, and the assessee has difficulty achieving the desired goal.
If you are still a credit white, you may wish to get a credit card, start accumulating credit history between yourself and the bank, and improve your credit score according to the following guidelines:
- Keep the same account funds stable for at least one year
- Concentrate on using specific credit cards and leave a swipe history
- Pay your card fee on time and in full every time
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Emergency reserves, insurance, investments and credit assets are all important tools to help us face the risks of life and size, and in this order, the systematic establishment of a strong financial fortress can bring us enough security.
The five steps mentioned in this article are designed to provide financial beginners with the infrastructure to think about when learning personal financial allocation, and to know what resources they have at their disposal, so that the journey of life will be smoother and more steadfast.
Finally, whether in personal finance or career development, you should expect yourself to have the ability to learn independently and the mentality of upward growth, in order to continue to lead yourself to the far away you desire in your heart.
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