5 myths about personal financial management that every woman should know
When it comes to manage personal financeThere are many myths that people often spread among themselves.
In this article, Ms Mina Chung (Ambassador of the women’s community on finance in life) I will highlight some of the most common myths about personal financial management and the truth behind it that you should read to avoid getting yourself into unnecessary troubles and confusion but very difficult to stop!
Myth 1: Financial planning is not for me
Financial planning allows you to discover how to spend, save, and invest your money in the best way possible. (Illustrated image)
Truth: It doesn’t matter how much you make or how much you save.
Whether you are a college student or a successful businessman, financial management should be a priority. Financial planning allows you to discover how to spend, save, and invest your money in the best way possible.
Understanding how money (whether cash or credit) works helps secure the future for you and your family.
Myth 2: Retirement savings aren’t important
Truth: The value of retirement savings lies in the time it takes to accumulate. So when it comes to managing your personal finances, you should start investing for your retirement as soon as possible, which will help you live a fuller life in the future.
According to statistics of Standard & Poor’s – a financial services company in the US, financial needs in retirement are about 60-80% of the amount that each person uses to spend when young. That means, you need to save about 12-16 years of income to be able to live comfortably throughout your 20-year retirement life.
You can apply the x25 rule to calculate how much money you need to have for retirement. If you need 10,000,000 VND/month or 120,000,000 VND/year to spend, then the minimum amount you need to live in 25 years of retirement is 120,000,000 x 25 = 3 billion VND. From this number, set a savings goal for yourself from a young age.
Myth 3: Don’t invest in risky items
High risk equals high return. (Illustrated image)
Truth: Although guaranteed products may seem less risky, always remember that high risk equals high return. Instead of automatically focusing on products that guarantee a fixed income, keep in mind that you still have to factor in inflation and taxes that may even outweigh the returns.
Take advantage of calculated risk investments such as stocks that not only provide higher returns but are also a means of portfolio diversification.
Myth 4: No need for a financial advisor
Truth: Some of the advantages of having a professional look at your finances are that they can advise you on how to save and invest and understand the different financial products available on the market. So you can absolutely hire your own personal financial advisor. If you want to learn how to manage your own finances, you can seek advice online or attend courses and seminars to get enough basic knowledge.
Myth 5: Being good at math is good at managing personal finances
Truth: Being good at math and knowing how to do spreadsheets doesn’t mean being good at managing personal finances. Personal finance is all about making sure you’re “healthy” financially and don’t spend more than you can afford. Therefore, you only need to perform basic calculations and with the help of software, you can set up a budget for yourself.
The technical jargon may be intimidating, but if you start with the basics, personal finance management can really inspire you every day!
* The article is supported by the advice of Ms. Mina Chung (Ambassador of the specialized women’s community on finance in life).
at Blogtuan.info – Source: Afamily.vn – Read the original article here
