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I frequently advise youngsters to handle their earnings through four distinct phases. Despite emphasizing the significance of financial management all the time, numerous individuals either do not pay attention or lack the perseverance to heed my guidance.

The initial step involves establishing an emergency fund that accounts for a minimum of six months’ worth of living costs. Should your monthly expenditure amount to VND10 million (USD$391), ensure that you maintain savings totaling at least VND60 million. These funds ought to be kept as liquid resources such as cash or equivalents that can swiftly be turned into cash when needed.

Someone is depositing funds into a jar. Stock image courtesy of Pexels.

In case you are the primary source of income for your household, this fund ought to encompass all of your familyโ€™s expenditures. For me personally, I maintain enough funds to cover a full year’s worth of emergency situations.

After setting up your emergency fund, the subsequent step should be establishing a rainy day fund aimed at saving for anticipated expenses such as purchasing items like a television, refrigerator, washer, motorcycle, or vehicle. This fund could also be segmented into various classifications based on your specific requirements.

Next, concentrate on establishing a growth asset fund. This involves allocating resources into assets that appreciate gradually over time like property, gold, savings accounts, US currency, top-tier equities, treasury bonds, or diversified mutual funds. Such investments usually increase by around 8-15% each year.

Lastly, set aside approximately 5% of your total assets for high-risk investments. This amount should consist of funds you can comfortably part with. Should you succeed, excellent; if not, you simply proceed without concern.

I consistently recommend to youngsters to adopt this approach, but most often they disregard it. Instead, they opt for high-stakes ventures and appear unable to understand the importance of consistent, systematic accumulation of wealth.


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