financialtreat – will explain about why money management is important which you will get in the following article. let’s look at this article carefully!
Financial management is an effort made by a company in designing activities related to the storage and control of funds and assets. Given the importance of financial management, you should plan it carefully. Therefore, do you know why money management is important?
This time I will invite you to know the importance of understanding the purpose and function of financial management. This is important because money that is managed without knowledge can cause problems in the future. Well, on this occasion, we will talk about why money management is important. And they know the importance of financial management.
Come on, do you know why money management is important?
What is finance?
The term “finance” is often interpreted as a way of managing, organizing, and raising a certain amount of money to expand and set up a new business. In the system for managing these finances, they can be put into three groups: public, private, and corporate.
There are several theories and practices used in finance, such as credit, money, securities, banking, underwriting, foreign exchange, and so on. With finances, it becomes the foundation to manage the money we have and allocate it.
In managing finances, good management is definitely needed to achieve the desired goals. Based on economic knowledge, finance also needs to be understood on the basis of its functions: asset management, risk management, financial management and others.
The Importance of Managing Finances
For those of you who just want to start managing finances, of course, you need a reason to trust more and more why you have to manage finances. If there is no important reason, it is really difficult to manage finances. It is better for the money to be used for other things rather than kept without any reason. Well, therefore, we will tell you the importance of maintaining and managing your finances. Check out the presentation below!
1. There is an emergency fund.
The first reason is that we have an emergency fund! So, what is this emergency fund? The emergency fund is a fund that you can use for urgent matters that you cannot overcome only with normal finances (fixed budget), so this fund is used without a certain schedule and is also an emergency in nature.
We can’t predict the future; anything can happen with the blink of an eye. If the saying goes, “Prepare an umbrella before it rains”. So, with this emergency fund, we can always be ready if there is a sudden incident.
It is very important for you to prepare an emergency fund because this emergency can happen at any time, for example, medical expenses when you fall ill, arriving at a layoff with a company, or the severity of the current coronavirus pandemic in all countries that prevents many people from making a living as usual.
With this emergency fund, you don’t have to worry about the unexpected happening anymore, because you already have a reserve of money that you can always use. There is no need to be dizzy twice, right?
2. Actualizing Life Goals
Of course, in this life, everyone has their own goals to be achieved. Some want to buy a house, buy a cool car, buy the latest smartphone, get married, and many others. All of these things can be achieved with the thing that we discussed earlier, namely money.
With the right financial planning, such as saving and saving, all the goals you want to achieve can certainly be carried out slowly, really! However, keep in mind that nothing is instant, so you still have to be patient to realize your life goals while managing your finances.
3. Become accustomed to living on a regular basis.
This is one of the reasons that you may not be able to get it directly and in physical form, such as the emergency fund above. However, this is quite helpful for someone who wants to change bad norms. This bad norm is the most common example of which is extravagant. Collecting money is much more difficult than spending it.
To be able to get a lot of money, you certainly have to work extra, but except for example, if you want to spend money, just go to the mall, spend a whole day without business and without thinking, blam, the money will run out quickly.
So, the conclusion is that living regularly is hard to do too. By getting used to managing finances, of course, everyone will also get used to living a regular life. Yes, being economical does not mean being stingy with yourself to the point that you do not buy necessities.
4. Leaving A Legacy
We will never realize what the future holds, including tomorrow. If you die tomorrow, what financial legacy do you leave for your family? Is it as an investment, gold and also a large amount of money? Are you bothering all your family members with this debt of yours?
You can certainly design the future by being wise with your finances and planning for everything that may occur.So, don’t lose you, the family must also bear the weight of your debts, huh!
5. Reduce Financial Risks
The more money you have, the more vulnerable your financial situation is!Of course, by being smart in managing finances, the risk will be less. If you save and invest, your wealth will naturally be even greater!
6. Be financially self-sufficient
For example, we can do whatever we want, whenever we want.However, the less you have for wealth and the more debt you accumulate, the less freedom you have.
By having adequate assets, you don’t have to owe anyone. With this financial freedom, you can do whatever you want by buying anything, but don’t get out of bounds. Well, above, that’s an important reason for you, why you have to manage your finances well.
Read more financial Management:
- Asset Lifecycle Management that Turns Out to be Very Important for Companies
- Asset Management Tools You Can Use for Enterprises
7. Begin Investing
Investment also has an important role in presenting a strong financial atmosphere. How to manage finances by allocating funds into an investment instrument can not only keep your financial situation in good shape.Investment can also bring benefits so that your financial situation gets stronger over time. If you have good money. And it will be easier for you to live your dream life in the future without worrying about money.
Those are some important reasons for managing finances so that the finances you have can be controlled. Well, on this occasion, this article talks about why money management is important. Hopefully, some of the examples above that have been mentioned will be useful for you, especially for those who have a lot of money and still don’t know how to manage it.