POPULAR SERVICES
- Do my math homework
- Do my Statistics homework
- Academic writing help
- Do my Accounting homework
- Take my online class
- Biology homework help
- Physics homework help
- College homework help
- Assignment help
- Chemistry homework help
- English homework help
- Economics homework help
- Buy term paper
- Programming homework help
- Homework help
RELATED content
- What is a business finance
- How to calculate finance charge
- Difference between finance and accounting
- How to finance a business
- What to do with a finance degree
- How much the finance major make
- Roles of a finance Manager
- What is a levarage in finance
- How to manage your finance
- What is a quantitative finance
- What are securities in finance
- What is finance
Financial consideration is in all clusters of life's activities. Financial education is becoming increasingly important, not just for investors and people in the business. It has become essential for families to decide how to balance their budget, save or borrow to buy homes, look for funds for children's education and ensure financial security when they retire. On a smaller scale, people have always been able to manage their finances. They could decide how much to spend on a holiday or how much to save to buy a piece of furniture, but on a broader scale when it comes to elements of investment, the markets are continuously changing in the fluidity of the rates and diversity of the products offered. This article will consider why finance and finance education is important on two levels, at home, and in businesses.
Why finance important at home
In a household setting, we require money for the following reasons
Shelter
Shelter and housing are basic human need. Individuals and families use the money to put a roof over their heads. Homeowners have had to purchase or build houses while tenants pay rent every month to be allowed to live in a landlord's house. This is one reason for finance and finance management in the family unit.
Food
To survive and be productive in one's occupation, one has to consume a healthy diet. Every day we need money for food supplies to cook at home or purchase meals in restaurants. Finance and financial planning are important to ensure that people do not run out money for food.
Clothing
Similar to food and shelter, clothing is a basic need that requires finances.
Utility bill
Finance and financial planning are important to enable us to keep utility bill payments up to date. Examples of these bills are electricity and telephone bills.
Education cost
Financial planning is important to ensure we have enough saved for education fees for students in the family. Banks and financial institutions have education products and policies that allow us to save for costly high school and college expenses.
Luxury and supplementary items
Apart from necessities, individuals need money for a supplemental budget for luxuries like going for vacations and purchase of other luxurious items that make people happy.
Securing retirement and future
Finance is important because it gives us the organization and planning capacity to ensure that once we have retired from our regular jobs, we still have enough left over to survive.
Sources of finances in households
Employment and Personal business income
Employment income is the primary source of finances in the majority of households. The salaries earned from employment support the monthly budgets of the household, and with financial maturity, the salary also includes a proportion of investment and saving. For families that run personal businesses, they get the money they require from the business profits.
Savings and investments
Individuals source for vast sums of money for projects or purchase of expensive items like vehicles, housing or electronics from savings they have accumulated from their monthly earnings.
Loans
Loans from financial institutions are another source of large sums of money for projects and purchase of expensive items that do not fit in the regular budget from a household's monthly income.
Why finance and financial management is essential in businesses
Purchase of fixed assets
Business finance is required for the purchase of permanent assets like machinery, office space or buildings that will be used by the company.
Day to day expenses and working capital
Business finance is important to provide the necessary amount of money for the day to day expenses like maintenance of stock, payment of bills and payment of salaries.
Boost profits
Business finance is required to create budgets for advertisements and promotions of company products to boost sales and profits.
Company expansion and growth
Company growth and expansion requires funds for rebranding and purchase of additional fixed assets and a supplementary budget for the increment of working capital.
Sources of finance in businesses
Debt
A debt is any amount of money that is borrowed from an external party to be repaid at a later date. Business owners can source for funds by borrowing from Family and friends who have ready finances and are willing to part with them to support your business. Banks and financial institutions that offer loan products for duration of time at a defined interest agreeable by both parties. These loans can be secured with collateral or unsecured and contractual.
Equity
One can acquire funding by accepting funding from investors in exchange for partial ownership of your business in the form of shares. One can get equity from the following entities. Angel investors who support businesses that have a high potential for returns and profit. Family and friends who would be financially capable and willing to fund your business for the chance to own shares in it. Venture capitalists who issue large sums of money to companies or businesses in specific industries that they are interested in.
Finance is vital in every household or company, and it is essential to seek finance help from financial advisors especially when you are considering investment options.