Four financial management tips to kick-start your wonderful life

You must be looking for ways to manage your finance if you are reading this article. When it comes to finance principles, regardless of what they are, the basics remain the same. Implementation matters the most. If the title of this article was changed to “Travel Tips for 2018”, many readers no wonder will search on the Internet while reading and do their best to match one or more of their plans of annual leaves with the public holiday, or even book air tickets and tickets of special tourist attractions half a year in advance. What they want to do is to maximize their enjoyment with the least money. So does your financial planning behaviour. 

Spend less than you earn

There is no doubt that it is good to enjoy life by travelling and spending money, but it is important to have reserves in order to enjoy worry-free spending. Apart from specific target savings, it is equally important to have a saving habit. Better to save up half of your salary if you do not have any family burden while those have family cost should also save up at least 10% of the salary. Have money deducted from you monthly payroll can avoid unintended spending.

Avoid debts

If you spend less than you earn, you will not normally have debts. But if you do incur debts due to inappropriate financial planning or special circumstances, you should deal with them promptly and, in particular, avoid debts of high interest rates or compound interest rate. 

Risk management

Arrange enough protection for you and your family according to your life stage and expected coming events (e.g. getting married, giving birth to a baby) so that your family finance will not be impacted significantly and maintain the original quality of life even though you encounter accident or critical illness.   There are various protection plans in the market providing both whole life protection and guaranteed savings returns.

Diversified investment

Generally, it’s better to have a liquid cash flow of 3 to 6 months, and according to your risk tolerance level, allocate your savings for short-, medium- and long-term investments on the basis of risk diversification and asset appreciation at the same time. Capital preservation products offers preservation for your capital only, it may not, however, off-set the eroding power of inflation for your capital. Stocks offer relatively higher returns, but fluctuations are also greater. This is not the deal for general investors. By contrast, you can consider life savings products with guaranteed returns. There are designated experts to manage funds for you, rendering it possible for you to reap returns without your own risk exposure in the market. It may be a good choice with their additional protection benefits. There are also other plans offering guaranteed cash payments at your disposal every year. So more money could be injected into your travel fund!

Let’s take action as a new year begins. Have a proper review of your financial situation and planning and consult professionals if necessary.