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There are two types of financial management: business and personal. Both types are centered on the effective management of income, expenses, debt, and investments. The type of education required to learn financial management differs between the two types.
Business financial management is learned through post-secondary education in accounting, business, or commerce. The courses offered in these programs provide the foundation of knowledge required to manage the finances of a company over the long term. There are also wide ranges of specialized courses that focus on issues that are unique to different industries.
The best way to learn more about financial management is to obtain a position in the financial services department of a company. You will have an opportunity to study their business process, decision making, and rules. Over time, this perspective will allow you to understand the materials covered in your business school courses in a more comprehensive way.
It is important to remember that the role of the finance department depends on the type of finance activity that the firm is engaged in. A company with a large amount of investments manages their funds in a different way than a business with a cash flow problem and dropping revenues. The ability to manage both these firms with skill is critical to a successful financial manager.
Personal financial management is the short- and long-term management of your household finances. This is an area of weakness for the majority of people, as money management skills are not taught, but gained through experience. To learn how to manage your finances, there are three options: books, financial planners, and credit counselors.
There is a wide variety of books, podcasts and television shows available to teach you how to manage your finances. Invest the time in this important skill to avoid too much debt, cash flow problems and living beyond your income. Money issues are the main cause for divorce and create a great deal of stress and anxiety.
Professional financial planners provide an independent opinion and develop a financial plan for you. The plan is based on your income, expenses, and goals. Working with a financial planner will teach you management techniques to help you increase your wealth and spend your money wisely.
Credit counselors offer courses and individual counseling on personal financial issues. Their role is to help you reduce your debt, manage the money you have and live within your means. The sessions are free and can provide the framework for successful money management.
@Suntan12 -I wanted to say that I always try to read financial management articles and books because I learn something new every day. Sometimes personal finance topics can be overwhelming, but if you read up on these topics daily it will help you develop some knowledge of investments and helps you learn how to manage your money.
For example, I learned the differences between term and whole life insurance and which investments to avoid. I like to manage my money myself and do not use a financial advisor and I credit my knowledge of financial management with the amount of reading that I have done. This allows be to manage my money myself without worries.
@Cupcake15 - Good for you! I wanted to say that it is hard staying out of credit card debt because spending with a credit card is so easy because you don’t have to worry about the payments for another month.
I try to set money aside for an emergency fund every month but some months I can’t because something always comes up. I was thinking of taking a financial management course offered by one of the financial advisors that are on television. It seems straightforward. My problem is that I can control my spending but I get confused as to how to allocate my money for other areas.
I always thought it was a good idea to pay off
the house, but if I do that I can’t set aside money for retirement. A friend of mine told me that this program list the steps that you have to take with regard to your finances so there is no question about what to do first.
I just wanted to say that I agree that understanding financial management takes time because working with a budget takes a lot of getting used to. I know that when I first got out of college I had credit card debt that developed over the years until I got fed up with making the minimum monthly payments.
My credit card balance at the time was $9,000 and it was then that I decided to take a financial management course and follow a few of the financial experts on television and listen to their advice. I think that hardest part for me was to set up a budget because I had to predetermine what my fixed expenses were
and what my variable expenses were going to be.
I got into trouble with my variable expenses so I set up automatic payments for my fixed expenses and then set aside an envelope system for my variable expenses.
For example, if I allocated $1,500 for variable expenses, I would label each envelope and put that exact amount of money that I would need. This worked for me because I did not make any impulse purchases because every penny was allocated. After I paid off my credit cards I said that I would never carry a balance again.
This happened thirteen years ago and I have continued to pay off my credit cards at the end of the month ever since.
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