A different perspective on finance

Although more and more managers are beginning to pay attention to financial management, few are really familiar with financial management. What does financial management include? What should be done? Liu Aixue, manager of Beijing Branch of China Pacific Life Insurance Co., Ltd., introduced four aspects of financial management and some issues that should be paid attention to.

What is financial management

Personal financial management is to fully analyze the current situation of personal property and risk-taking ability under the established financial management goals, and to choose different risk-return characteristics and different time periods by balancing various income and expenditures A structured portfolio that achieves a balance of return and risk with the goal of maximizing value.

This definition includes several characteristics of financial management. First, financial management is a battle, not a battle. Battles are macroscopic and long-term, while battles are short-term and local in nature. As a financial planning process to achieve life goals, financial management should focus on the general direction and start with everyone's life planning. Therefore, reasonable life planning is one of the indispensable conditions for financial management.

Secondly, financial management based on long-term considerations focuses more on balance and maximization of value rather than price. Some common concepts such as personal financial management is "money makes money", and to be successful in financial management, you must invest in high-yield products. These concepts are all from the perspective of financial planning, and financial planning cannot be equated with financial management.

Four aspects of financial management

Since financial planning is only a part of financial management, what other content does financial management include? Liu Aixue painted a cistern. She believes that financial management should start from four aspects: earning, earning, saving and preventing.

Earning is the main body of the reservoir, which refers to the process of obtaining work income on weekdays. In addition, earning also means "out", including investing time and money, improving the ability to earn money, and investing in life, such as regular physical examinations, fitness and seeing a psychiatrist.

Earning is the side pool of the reservoir, which is the process of operating, investing or speculating on existing money through financial channels.

Province is the gate valve of the pool and an important part of financial management. Many people don't pay attention to this link, spend a lot of money, and lose a lot of money.

“There must be a concept of living within your means when consuming.” Liu Aixue said, “For example, everyone has several credit cards in their wallets, but few people use them separately. It is recommended that when using credit cards, different life functions should be used differently. For example, a card for shopping in a supermarket and a card for refueling. This will help you understand the corresponding situation of quality of life and expenditure.”

The protection is the manhole cover under the reservoir. play a role in risk prevention. As a financial manager, you need to measure your risk exposure coefficient, choose some safeguard measures that suit you, and build a platform to maintain your living standard.

Financial Pyramid

Earning and saving money are the four aspects of financial management. The purpose of financial management is to achieve a balance between these four aspects in life. Building pyramids is a means of achieving balance.

In a healthy financial management pyramid, the tower base must be the "guarding" part. According to the order of priority, the bottom layer should be "defense" means such as life insurance, critical illness insurance, and pension plan. Its role is to transfer risks and lay a solid foundation.

Up one level are savings and emergency funds. The emergency fund is the scale of 3 to 6 months salary, and the storage method should be convenient to access.

Further up, there are low-risk investment varieties such as bond investment, including treasury bills and corporate bonds. Bonds play an important role in avoiding interest tax.

With the increase of risks and skills, the top part of the tower is turned from "defense" to "offensive", and the offensive part includes fund stocks, real estate and futures, collections, etc.

Because of each person's different life plans, the purpose of financial management is different, and the ratio of "offense" and "defense" of the pyramid will also be different. Most people will choose the strategy of winning while maintaining stability. Generally, the "offensive" part accounts for 30% of the total assets, which can be tolerated, or a little more, but 50% is the most.

When planning a specific financial plan, it is necessary to see which consumption can be controlled and which investments are suitable for making through the family income statement, cash flow statement, and debt sheet according to the family's own situation.

Article sub-column: Misunderstandings about financial management

There are several common misunderstandings in financial management.

Misunderstanding 1: Blindly pursuing high returns and ignoring risks. For example, some people invest their assets in futures and stocks, only thinking about how much profit they can get, and in the end they lose everything, and their basic life cannot be guaranteed. Recommendation: Develop risk awareness. When managing financial affairs, it must be clear that income and risk are twin sisters, and high risk must coexist with high income.

Myth 2: Go with the flow and ignore your own needs. Many people see which products others have bought to make money, and they also buy the same products. Even under the stimulation of possible high returns, they ignore their own capital status to buy products that are not suitable for them.

Suggestion: Learn more about financial management related products, don't follow others' opinions, and rely on your own mind to judge the types of purchases. Everyone has different preferences for their own planning and risk, and should have different financial plans.

Myth 3: Simplify the definition of financial management. The concept of wealth management has only gradually emerged in the past few years. Many people simply define wealth management as deposits, such as depositing tens of millions of yuan in the bank. They do not know how to plan this asset so that it can increase in value. Some people regard wealth management as an investment product, that is, "money makes money". They don't know that preserving the value of property or investing in oneself is also an important part of wealth management.

Suggestion: correctly understand financial management, accept the concept of "keeping", and plan financial assets from a strategic perspective.