Article | Yu Yujie

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What is financial management? Baidu's authoritative explanation is very clear:

Financial management, a financial term, refers to the management of finances (property and debt) for the purpose of maintaining and increasing financial value.

This explanation is a broader concept than what we usually call financial management. Financial management in daily life generally refers to saving money and then investing it in various investment products, hoping to achieve the purpose of maintaining and increasing the value of money.

Specifically, what we call daily financial management includes such specific actions and behaviors.

01

Live within your means, solve debt and moonlight problems, and ensure that you have savings and a monthly balance.

The prerequisite for financial management is that you have to "manage money."

So the first step in financial management is to solve the problems of debt and moonlight.

If your monthly income cannot even pay off your debts, and you have to tear down one wall to make up for the other, or if you have money every month, you will not be able to save principal for financial management, and you will have no money to manage.

To solve the problem of debt and moonlighting, you need to sort out your monthly income and expenses:

Keep accounts and see how much you spend every month. How much is earned.

If you spend more money than you earn each month and are still in debt, you will only owe more and more. The most important thing at this time is to first look at ways to increase revenue and reduce expenditure, so that you can balance some money every month, and then formulate a debt repayment plan to solve the debt problem first;

If you are a moonlighter, you also need to Keep an account and see where your money is spent every month. If you can't find a way to increase your income in the short term, cut some unnecessary expenses so that you can start to have a slight balance each month.

02

And research various financial products and financial knowledge on the market to decide what kind of investment products to invest your money in.

We have seen many financial management failures in social news, but the core reason for the failure to recover the principal is that they invested in investments that are simply beyond their capabilities.

In fact, financial management is an activity that requires very high comprehensive abilities in all aspects, such as people's knowledge reserves, common sense judgment, managing one's own greed, learning ability, etc.

Although the sales staff of those financial products will tell customers that they can wait to make money after signing, many financial products are easy to buy and sell on mobile phones.

But if you want to truly realize the purpose of maintaining and increasing the value of assets, or even ensure that the principal is not lost, you need to have sufficient knowledge and understanding of financial management.

So, learning more is essential.

At the very least, you need to understand what types of mainstream investment products are on the market, what are the risks and general returns of each type, and then choose a more reliable investment product that you can grasp and bear the corresponding risks. risk. Others, no matter how well the salesperson talks, remain unmoved.

03

Carry out financial management based on the knowledge and skills of investment and financial management.

After learning and mastering certain investment and financial management knowledge and skills, you can practice financial management according to your actual situation.

For example, by learning about financial management, you know that you should first set aside some emergency reserve funds for yourself and your family in case of emergencies.

This amount is approximately your or your family’s total expenses for 6 months. This money should be readily available. Then this part of the money can be deposited in the bank as a current deposit, or if you want higher returns, you can buy financial products that are also available at any time and have very low risks.

The money saved in the future will not be used temporarily and can be used to buy investments with higher returns.

For example, products with low risk and relatively high returns, such as time savings, can be gradually invested in mainstream investment products such as bonds, funds, and stocks. After they have mastered more and more investment and financial management knowledge and skills, and can clearly understand their respective risks. Related Q&A: What is R5 level for financial products? The financial product levels R1 to R5 respectively represent the risk level of the financial product. Among them, R1 represents low risk, which means that the financial product guarantees full repayment of the principal, and the product income changes with the investment performance and is rarely affected by risk factors such as market fluctuations and changes in policies and regulations. R2 represents medium and low risk, which means that the financial product does not guarantee the repayment of principal, but the principal risk is relatively small and the fluctuation of income is relatively controllable. R3 represents medium risk, which means that the financial product does not guarantee the repayment of the principal, has a certain principal risk, and the income is floating and subject to certain fluctuations. R4 represents medium to high risk, which means that the financial product does not guarantee the repayment of the principal, the principal risk is relatively high, the income is floating and volatile, and the investment is easily affected by risk factors such as market fluctuations and changes in policies and regulations. R5 represents high risk, which means that this financial product does not guarantee the repayment of the principal. The principal risk is extremely high, and the income is floating and volatile. It is only suitable for investors with strong risk resistance. : Wealth management products, that is, products designed and issued by commercial banks and formal financial institutions. The raised funds are invested in relevant financial markets and purchased related financial products according to the product contract. After obtaining investment income, they are distributed to investors according to the contract. a category of products.

Financial management types Bank RMB financial products can be roughly divided into bond type, trust type, linked type and QDII type. Bond investments are made in the money market, and the products invested are generally central bank bills and corporate short-term financing bonds. Because central bank bills and corporate short-term financing bills cannot be directly invested by individuals, this type of RMB financial products actually provides customers with the opportunity to share the income from money market investments. Trust-type investments include trust products that are guaranteed or repurchased by commercial banks or other financial institutions with higher credit ratings. There are also products that invest in trusts for the beneficiary rights of commercial banks' high-quality credit assets. The final yield of linked products is linked to the performance of relevant markets or products, such as linked to exchange rates, linked to interest rates, linked to international gold prices, linked to international crude oil prices, linked to the Dow Jones Index and Hong Kong stocks, etc. QDII type The so-called QDII refers to a qualified domestic investment institution that manages overseas financial services on behalf of its clients, and refers to a commercial bank that has obtained the qualification for overseas financial management business on its behalf. QDII-type RMB financial products, to put it simply, mean that customers entrust their RMB funds to qualified commercial banks, and the qualified commercial banks will convert the RMB funds into U.S. dollars and directly invest overseas. After maturity, the U.S. dollar income and principal will be settled into Wealth management products allocated to customers after RMB. Electronic spot new investment and wealth management products investment channel wealth management products can generally be purchased through commercial banks or non-bank financial institutions. Traditional channels include: banks, insurance companies, securities companies, futures companies, and fund companies. Emerging channels include: third-party financial management institutions and comprehensive financial management service institutions. The first category of common products is fixed-income financial products. The most common ones include bank financial products and trust financial products. The second major category is capital-guaranteed and floating-income financial products, mainly issued by banks. The third category is non-principal guaranteed floating income financial products, which are mainly divided into bank financial products and securities investment financial products.