Financial planner: Why you must learn financial management when living in the United States

Whether you can manage your finances determines the quality of your life

Mr. Wu came to the United States from Vietnam 13 years ago and worked as a restaurant waiter while studying. After years of hard work, he became an outstanding financial planner in the industry.

During his financial management career, Mr. Wu noticed that many new Asian immigrants from poor backgrounds could only work hard in restaurants or construction sites when they first arrived in the United States. However, they were willing to learn financial management and money-saving skills, and learned to “let money work for them.” Eventually, they accumulated a large sum of money in their investment accounts, and some even bought several houses for rent.

On the contrary, many people not only fail to manage their finances, but also engage in financial “self-attacks”, “often using credit cards to spend money on unnecessary things”. Mr. Wu said that some Americans work eight hours a day, but often spend more than their income; they use credit cards without thinking, owe too much loans, are forced to pay interest, make banks rich, and fall into poverty.

In particular, some people spent 15 or 16 years in the United States to obtain a degree or certificate, but they only work to make a living, without thinking about accumulating capital for investment, and only save a small amount of money, so that they are unable to support their parents; some parents are unable to financially support their children. Among these people, although some have a good income, due to lack of financial management knowledge, not only have they not achieved financial freedom, but they may also be on the verge of bankruptcy as they age.

“Is this fair to them?” Mr. Wu said. California is a place with a high cost of living. You can’t live on retirement money alone. “That’s why financial knowledge is so important. Everyone should spend time learning about financial management, how to make money work for them, and how to invest in the future.”

How to start financial planning

For those who are new to the workplace and learning financial management, Mr. Wu recommends that everyone, in addition to paying for food, energy, health insurance, etc. every month, can learn to build an emergency fund, starting with saving $1,000 and forming a habit. As the name suggests, emergency funds can be used to deal with emergency needs, such as emergency visits, car, washing machine, house repairs, etc.

“We must have 3 to 6 months of savings for emergency expenses, so that we can develop the habit of saving money and gradually build a strong financial foundation.” He believes that you can save 5% as retirement funds or make your favorite investments; if possible, you can increase the emergency fund to 12 months, so that even if you face unemployment, you can calmly deal with the crisis.

With a good economic foundation, you can consider providing more protection for your family, just in case; for example, middle-income families can consider purchasing life insurance or disability insurance, etc. After laying the groundwork, you can then consider making more long-term investments.

Understand investment risks

Mr. Wu pointed out that although any investment has risks, risks are always related to returns. He believes that investors’ risk tolerance should be considered: for conservative investors, we should find ways to ensure that they will not lose money; for some young people who are willing to accept greater risks, we can recommend them to get involved in the stock market.

Families with children tend to invest conservatively. In addition to purchasing life insurance, they can also consider making safer investments such as government bonds and mutual funds.