Young people can do the following to manage finances

1. Develop a financial plan

Financial management is a way of life, just like career planning, financial management A reasonable financial plan also needs to be specified.

Start from three aspects

Develop short-term, medium-term and long-term financial plans

When formulating the plan, there must be a specific time limit and specific target figures. In this way, a vague big plan can be broken down step by step into monthly, even weekly, and daily executable steps.

For example:

Your short-term plan is to save 20,000 yuan next year. You need to save 2,000 yuan every month. So what should your monthly salary be? Arrange expenses?

Your mid-term plan is to save 100,000 yuan in three years to buy a car. You save 50,000 yuan from salary, and you already have 20,000 yuan of capital in hand. If you use the investment to earn 50,000 yuan in three years, what investment method do you need to adopt? Will you continue to invest the principal in the future?

Of course, the plan must be reasonable. If you plan to have endless money, it is just daydreaming.

2. Regular review

As the saying goes, plans cannot keep up with changes. Once a financial plan is formulated, it does not remain unchanged. Remember to review and revise the plan in a timely manner. See what problems you encountered while completing the plan, whether they can be corrected, and whether subsequent plans will be affected.

Moreover, financial management and investment are a continuous learning process. When you actually manage money, your financial management ability will improve and you will be able to formulate better financial plans.

3. Know your own investment style.

When you open an investment account, most of them will have an investment style test. This is not a useless process and must be completed carefully. This will determine your mental capacity and thus give you clarity on your investing style.

Investment returns and risks are always proportional. Higher returns are what everyone wants, but excessive risks are not something everyone can afford.

Asset allocation is to pursue returns that are consistent with your own investment style on the premise of reasonably diversifying investment risks. Investment styles are generally divided into five types: conservative, prudent, balanced, active and radical. It is often said that "don't put all your eggs in the same basket"

It is best to allocate assets according to your own investment style. You must not give up risk diversification in the pursuit of high returns, otherwise a failed investment will ruin your life. It will affect your lifelong investment career.

4. Flexible asset allocation

Financial management ≠ investment, necessary protection savings, and short-term living expenses working capital are all part of the financial allocation.

As shown here

This is the most influential credit rating agency's survey of 100,000 families around the world with steady asset growth, and analyzed and summarized their family financial management methods. Of course, it is not completely applicable to everyone, but it can be used as a reference for young people who are new to financial management.