Technology Is another stream of evolution that has pinned down a few benchmarks over time. Business landscapes and the very same technology have tremendous potential to impact the primary sector, finances. It does impact it. But, are you and your company prepared for the trends that are happening in 2020 and beyond?
Understand Financial Management!
Why is it so important for entrepreneurs and how does it work?
It is of the utmost importance for every business owner and manager to closely monitor the financial situation of the company. After all, one doesn’t want surprises and the decisions and the investments that you make, should be deliberate and consciously taken.
This article briefs the historical perspective and describes the structure of Financial Management. It consists of Financial Accounting the field which we focus on generating financial overviews.
Management Accounting, whereby we work with the statements from the company’s perspective and focus on what actions to take. Corporate Finance that evaluates potential investments from a cash flow perspective.
Long long ago…
The oldest documents of accounting date from 1340. This way of accounting was first described by the Italian monk Luca Pacioli in his work from 1494 Review of Arithmetic, Geometry, Ratio and Proportion. No matter how many generations come by, the great thing about Financial Management is that if we understand the structure and apply it correctly, it will not change in the next 50 years.
After all, the structure has not changed much since the 12th century. It is great to read the annual report from the East Indian Trading Company made in the 15th century. It describes for example: “bribery of the sultan of Brunei for 3.000, – Dutch Guilders”, nowadays we would not describe it like that.
Tailor a finance road map:
- Set long-term goals like getting out of debt, buying a home, or retiring early. These goals are separate from your short-term goals.
- Set short-term goals, like following a budget, decreasing your spending, paying down or not using your credit cards.
- Prioritize your goals to help you create a financial plan.
Build on the basic finances:
When creating a financial plan, remember these things:
- Your budget is key to success. It is the tool that will give you the most control of your financial future. Your budget is the key to achieving the rest of your plan.
- You should keep contributing to long-term goals, like saving for retirement, no matter what stage of your financial plan you’re in.
- Building an emergency fund is another key factor in financial success and stress reduction.
Always commit to your budget:
Below are some tips for married couples who want to create a budget together:
- Consider switching to an envelope budgeting system that uses cash for spending areas that require more discipline.
- Use budgeting software with a mobile app so you can enter spending in real-time.
- Plan ahead to avoid any overspending.
Rule out debts:
Try these tips to help you pay off debt more quickly:
- Sell unused or unwanted items around your home to find extra money to add to your debt repayment plan.
- A second job can help speed up the process and may be necessary if you want to make fast or lasting changes to your situation.
- Look for areas in which you can cut your budget to increase the cash available for your debt payments.
Seek advice, it’s okay:
Investing is a long-term strategy that helps you in building wealth. You can also find financial help elsewhere, such as:
- A local church or community centre that offers free or low-cost classes or workshops on personal finances and budgeting. Occasionally, banks and credit unions offer courses, as well.
- A mentor that would be willing to help you formulate and work through your budget for the first few months. This can help you if you are overwhelmed by the budget process.
- If your parents or other family members are good with money, consider asking them for help, and talking to them about what worked for them financially and what they would have done differently.