💎 Three golden rules of financial management that Hong Kongers must know! A heartfelt, lengthy guide from our editor!

Dear Hong Kong readers, this time, I'm going to explain the "Three Golden Rules of Financial Management" to you! No matter how much you earn or whether you're an investment veteran, remember these three simple rules. They will determine how much you save, when you'll achieve financial freedom, and whether you'll feel secure in the face of adversity. Even Warren Buffett once said, "Wealth management is all about discipline. If you don't follow these golden rules, you'll inevitably stumble!" 💡💰

🏦 Golden Rule 1: Financial Pyramid Layering - A solid foundation and a safety net are top priorities

The so-called financial pyramid means that you must first plan out layers of protection: living expenses → life security → wealth accumulation → wealth appreciation → risk investment. Lay a solid "foundation" before you can move up. Without order or by investing haphazardly, you will at most be a "paycheck to paycheck clan" and go bankrupt if there is any unforeseen risk.

Local tips from the editor:

• Save an emergency fund (3-6 months of living expenses) first... In the event of illness, unemployment, or an accident, don't hesitate to ask relatives and friends for help.

• Adequate medical/critical illness/life insurance protection to transfer life risks.

• Keep a monthly account of your basic living expenses to ensure your income exceeds your expenditure.

• Consider long-term savings and asset investment for the remaining money.

The financial pyramid tells everyone to **"not skip steps"**, and to move step by step from steady to aggressive, and not to speculate in the stock market until you lose all your money.

💸 Golden Rule 2: The 631/541 Income Distribution Rule - Never spend recklessly, save first and use later

The 631 Rule / 541 Rule is highly recommended by the local financial management community: for every salary you receive, 60% (or 50%) should be reserved for daily expenses, 30% for savings and investment (or 40%), and 10% for insurance risk management.

My sincere suggestion:

• As soon as you receive your salary, automatically transfer the money to a fixed deposit account or investment platform, forcing yourself to use the "leftovers" first, and your savings will naturally be stable.

• Deduct savings/insurance first, and use the rest for fun/consumption/entertainment.

• Spending app/account book records how much you have used and where to improve!

Follow the distribution rules and you won’t have to worry about having no money to live a hard life. Long-term and painless investment will naturally multiply your wealth!

🔢 Golden Rule 3: The Rule of 72 and the Power of Compound Interest — Goal Setting and Investment Time Management

The Rule of 72 is essential for beginners in investing. Use it to calculate: How long will it take for your principal to double? The method is simple → 72 ÷ Annualized Rate of Return = Number of Years to Double .

For example:

• If your investment return is 7%, 72/7=10.3, which means your principal will double in 10.3 years!

• If the goal is to double the return within 10 years, the annual return must be above 7.2%.

Furthermore, the earlier you start saving, the more the compound interest effect of the principal will help you snowball your savings. The earlier you invest, the more likely you are to win!

Editor's action suggestion:

• Set monthly savings and investment goals (e.g., saving $200,000 in 5 years, building a $1 million investment portfolio in 10 years);

• The Mandatory Provident Fund (MPF) actively selects growth funds, which have an amazing long-term investment compounding effect;

• Use the "time value of money" principle around the clock to clearly understand the impact of each decision on future wealth.

⚠️ Editor's key reminder (action is the most important!)

Successful financial management doesn't rely on whims or luck, but on logic, discipline, and time management ! Remember:

• Financial KOLs, experts, and Buffett: "Long-term predictable cash flow + risk management priority + compound interest goals" are the three things you must do together to achieve wealth.

• It is difficult to get rich by saving money alone. Without financial management, you will definitely not be able to keep up with inflation. Without asset allocation, you may lose a lot of money at any time.

• The cost of living in Hong Kong is high, so you must not spend money indiscriminately. The distribution rules must be implemented!

🎁 The editor summarizes three golden sentences

1. "For a financial pyramid to be stable, planning the foundation is paramount."

2. "A reasonable income distribution means saving first and spending later, which provides long-term peace of mind."

3. "The compound interest effect depends on early action, and the Rule of 72 can help you achieve your goal!"

Whether you want to retire early, buy a house and a car, or achieve true financial freedom, apply these three golden rules and take small actions every day, and wealth will naturally follow! 💪📈📚