It is very important to remember that understanding money menagement – maybe not everyone will want to or maybe need to be an expert in finances but in fact everyone should be aware of some personal finance basics.
Once again before we will continue this article you should remember this that you don’t need to be a personal finance nerd but there are some basic concepts you should be aware of to manage your finances.
What is finance?
At the begining of this article we will explain you what is finance. The definition of finance isn’t hard it says that finance is the management of money but it also includes activities like investing, lending, borrowing, budgeting, forecasting and saving as well.
There are three types of finance:
- personal finance (the one we will be talking about),
- corporate finance,
- pubic/government finance.
What are the basics of finances?
Let’s start with mentioning this that the basics of finances means the process of managing your own money and also this how to make use of the funds that you generate.
Are you wonering what finances include? Well it is quite easy and understandable. Finances includes:
- credit,
- banking,
- investing,
- liabilities,
- assets.
Keep reading this article and find out more about basics of finances.
Personal finance basics you should be aware of
As we mentioned before there are couple of financial basics that every person should learn. And this is the place where you will find out everything about those basics.
Credit cards interest works?
If you are wondering how credit card interest works you should know that if you carry a balance on your credit card the card company will multiply it each day by a daily interest rate and add that to what you owe.
The budgeting basics
That is right budgeting can be annoying however it is an essential skill to develop early it can save your financial headaches. To manage it you should spend some time on your bills, what you are spending money on but also your savings. It is a good idea to use a budget calendar to write everyting you are planning to do with your money and put down a plan.
Managing debts
At some point you may have to deal with debt, it may be from student loans or credit cards that is why you have to understand how to manage it from day one. The most important thing is to unerstand how the debt works and how to pay it off faster.
Spend less than you earn
This may sound silly but it is very important to remember of. It is quite important to pay attention to your spending habits because you may end up needing to pay off debts.
Stock market basics
Don’t be scared to invest your money in the stock market, it is an essential part of people finances but also it is securing your future retirement.
Finance topics
Are you wondering what are finance topics? Well there is a wide range of topics that financial industry is concerned with. Here goes the list of common topics you might be expecting in this industry:
- financial statements,
- cash flow,
- interest rates,
- profit,
- yield,
- rates of return,
- cost of capital,
- shareholders,
- behavioral finance,
- creating value.
Facts
- financial literacy is the ability to understand financial skills like for example financial management or budgeting,
- there is something that can give access to diversified to individual or small investors and it is called mutual funds,
- U.S. Treasury securities are considered the safest investments in the world.
Tips
- if you want to control your spending, saving or investing you should create a budget ad thanks to this you will be able to improve your financial health,
- if you feel like you need some advice you can go to a financial advisor who is a professional person who provides expertise for client’s decisions when it comes to money matters and their personal finance,
- you should open yourself a saving account not to lose money on anything you find nice but to have some emergency fund when you will need them,
- if you want to go for finance career you can choose from accounting, audit, financial planning, lending, investment banking.
Conclusion
Now you should know many things about personal finances that you haven’t known before. To be honest you know all basic financial concepts you should know as the beginner in finance world. All you gotta do is to use all given you advices. Don’t waste even one of them.
This article is so interesting. I so happy that I found it, because i could be able to understand so many.