Finance is the life blood of Business. Without a proper finance management, no Business can run in this competitive world. It is important for firms and individuals to understand how to manage money. Financial management is an important factor in this expanding world for individuals as well as for the firms. Financial Management help us in planning, raising and controlling money in a firm. Proper management of finance helps in achieving the goal of the business organization. Thus, financial management is handling the finance of a business.
Individuals should also practice good financial management. Better financial management help us understand where and how to spend money. It also helps us to control money and to achieve our financial goals.
Why is Financial Management essential in a Business?
Financial management is very important in a business firm as it helps to achieve business goals and objectives. Some of the points why it is important are as follows:
- Maximises profit
- It makes the employees aware of financial savings
- Helps to plan the future growth of the business
- Helps in making proper financial decisions of the firm
- Helps to obtain sufficient money
- It ensures proper use of funds
- Controls finance
Why Financial Management essential for Individuals?
Financial Management is also important in the case of individuals too. By practicing a good financial management, we can learn to control money. Reasons why it is important are:
- Helps to understand the value of money better
- Can properly manage savings and spendings
- Helps to establish financial goals
- Helps to increase savings
How To Manage Money
Once we obtain money, instead of spending the entire money we can control or mange it in a variety of ways. We all know the importance of wealth, but none of us know how to manage and protect the fund. Here are some ways to manage money.
Here, 50% needs include requirements or necessities and expenses like food, households etc which of them cannot be avoided. Creating a budget is one of the most important step in controlling finance. Budget creation helps to estimate the amount of money for our needs.
30% wants include personal care, entertainments etc.
20% savings includes investments and savings that are useful at the time of financial emergencies. Financial emergencies can be in the form of accident or some other health issues. So, if such savings are done it will help us to deal with it easily.