Modern life increasingly brings about the demand for higher living standards and conditions. Along with that is the need to spend on daily activities. However, the habit of saving is always an important aspect emphasized in personal finance management tips.

Many people think that saving one or two coins or even hundreds of coins is of no use. After all, such a small amount of money will eventually have to be spent, which is the thinking of shallow-minded people. There is an old saying, "If you don't take a step, you can't travel a thousand miles," and if you don't accumulate small streams, how can you form rivers and seas? If you can save a few hundred thousand every day, after a year, try calculating how much money you will have in hand.

Many people cannot save money, often characterized by a lack of long-term vision and attention to detail. They always feel that the future is still long, focusing on the present and having a fulfilling life right now is the most important thing. A small amount of money spent does not seem to cause any impact. But if you spend money like this every day, it will become a big problem for you. Those who cannot save money often live carelessly, not paying attention to accumulation, and not learning how to save money will lead you to face terrible consequences at critical times.

Therefore, forming the habit of saving money is the way to create a living path for yourself. Many people always feel that living carefully like this is too much of a burden. In fact, if you calmly think about the issue, you will see that money can be saved, and when it is necessary to spend, you must spend, and when it is necessary to save, you must save.

Good personal finance management is preparing for unexpected situations that may arise

Khải is the child of a family with quite difficult conditions. Since he graduated and started working, his family's life has gradually improved, at this time, Khải feels he can relax comfortably and happily live for a few years. He often goes out with friends to travel on weekends or during long holidays. One time while at work, Khải received a call from a reporter that his mother was seriously ill and needed a large sum of money for treatment. At that moment, Khải panicked because he hadn't saved anything for years, and now with such an urgent household need for a large amount of money, he didn't know where to find it. Khải borrowed from a few friends to gather nearly enough money to take care of his mother.

Fortunately, his mother recovered and gradually got better, but Khải still had a debt. He regretted and said that if instead of frequently traveling and spending money, he had saved more, he could have taken care of his parents when they were sick. Therefore, the current Khải is no longer generous and carefree as before, living a life burdened with debt. In life, it is inevitable that some unexpected situations occur, and sometimes everything just happens suddenly. What Khải just experienced was too little, and by the time he realized it, the situation had already happened.

If you want to live a smooth life, you must understand that you always have to be a little cautious; if an incident occurs, you can still cope. Therefore, saving money is very necessary; only not saving will make you suffer. Later, when you think back, you will understand that learning how to save has advantages and no disadvantages; when necessary, it will not disrupt your life, nor will it make you lose faith in it. When the family's economy is relatively tight, you find it hard to be confident when invited to participate in travel activities or parties with colleagues; you also do not agree indiscriminately because you think about your current life, which is still too precarious.

With too many expenses, you cannot waste money on entertainment. Additionally, when talking and listening to others share interesting experiences, the places they have been to, and the items they have purchased, you cannot avoid feeling a sense of loss and disappointment. This is also a manifestation of a lack of confidence; a very real thing is that a person with limited finances feels restricted wherever they go. They will be very cautious in spending, whether at a party or doing something else. They will feel they have no right to speak up and choose, which is really very uncomfortable. It can be said that financial capability creates limits on imagination; this is true because without money, it is difficult to do anything. Even if the idea is good, it is still limited because there is no money to implement it, and over time, you gradually become less competent. Life also begins to decline.

People often only think about how to earn more money; of course, earning more money is important, but we also need to think about strategies to manage the money we currently have better. Below are five financial rules to help you use money effectively, thereby creating a significant asset in the future.

1. Desire less

Earning money is hard, but spending money is easy; you have to work thousands of hours to earn a certain amount of money, and then you can use all the money earned to spend on a new car, a luxurious vacation, and designer goods. This is not a wise way to use money; one of the best personal finance tips is that to get out of debt and create wealth, you must spend less and desire less than the money you earn.

Every time you want to buy something, ask yourself if you really need this and what need it fulfills. Planning expenses is one of the most important rules for managing a budget; after planning for a large expense, try to limit the amount of money you spend each day. This will allow you to stop wasting money and avoid using money for unnecessary things.

2. Know how the economy works

You don't need to become an economist, but you should have certain insights into how the economy works to better protect your money. When do bank interest rates tend to rise or fall? What are bonds? What is inflation? What is the market cycle? Read books about finance that discuss how the investment economy works. If you don't like reading books, take some time to update market economic news. Every day, basic knowledge will help you manage your money better and panic less if fluctuations occur.

3. Avoid personal debt

Personal debt will destroy your asset accumulation process; borrowing money is not bad, but consider loans that are truly necessary. If you want to start a business or make large real estate transactions, loans will help you have more opportunities for development. However, we should be wise about personal debt, just like investing; borrowing also has its own rules.

The advice is to never borrow money to buy cars, electronics, or anything that will depreciate in value. Think carefully before borrowing to do anything. Remember that borrowing money is not free; you must pay back the debts later, and it will affect your asset accumulation process.

4. Save as much as possible

Everyone knows that saving is good, but not everyone can do it. Not everyone who earns money will become wealthy; net worth is what determines whether you are truly wealthy or not, not your monthly income. Therefore, you must know how to save money, invest, and manage your debts wisely if you want to accumulate wealth. How much savings is enough depends on you, but financial experts encourage you to set aside at least 10% of your earnings for savings funds.

To save, you must act specifically and quickly; don't wait until next year to prepare for retirement or before a major event to start saving. Think of that savings as a fixed cost that you must pay monthly, just like rent and phone bills, before thinking about dining out and other personal desires.

5. Have a flexible short-term and long-term strategy

I work in the finance field, and I invest not to make money today, not even within a year. My investment strategy focuses on the long term, but I also need to generate income today to pay monthly bills. So, there must be something called a short-term strategy. My short-term money strategy is based on improving skills and creating multiple sources of income. Investing in personal education is a profitable investment, and you can earn money based on the skills you learn. Reading books, taking online courses to obtain certificates, or enrolling in self-development programs are all great options.

The more you invest in yourself, the more you increase your value. Additionally, I do not rely on a single source of income. This helps me avoid being passive when facing any risks in my job. If one source of income disappears, I don't have to worry too much because I can still earn money from other sources. You see, all these rules are not related to earning more money; of course, earning more money would be great. However, before you focus on making more money, manage the money you currently have well.