Personal finance refers to making a reasonable personal finance plan according to the financial situation and participating in investment activities appropriately. Personal financial investment includes: stocks, funds, national debt, savings and so on. Personal finance in the modern sense is different from simple savings or investment. It includes not only the accumulation of wealth, but also the protection and arrangement of wealth. The core of wealth protection is risk management, that is, when one's life and health are in an accident, or the economic environment is in a major adverse change, such as hyperinflation and a sharp drop in exchange rate, the living standards of oneself and one's family will not be seriously affected.

Risk management refers to the management process of how to minimize risks in projects or enterprises with certain risks.

Risk management includes risk measurement, assessment and emergency strategy. The ideal risk management is a series of prioritization processes, which give priority to the things that can cause the greatest losses and the most likely to happen, and postpone the things with relatively low risks.

In reality, the process of optimization is often difficult to decide, because the risk and the possibility of occurrence are usually inconsistent, so we must weigh the ratio of the two to make the most appropriate decision.