Why finance ?
Why Finance is important to the economy
From a macro perspective,
Finance is merely the practical application of economics. The Financial
System is the means by which an economy allocates money to its highest
valued use. In English, it is how people, businesses, and governments
raise the cash needed to do business. The goal of any financial system is
to make sure that those with good ideas get the money necessary to implement
the ideas. How this is accomplished in a market-based economy is through
the stock and bond markets. In a market-based economy, investors invest
in a firm (by firm here I am merely simplifying, the "firm" could be
a government or organization as well) and the firm takes the investment and
uses it to implement the business ideas.
People do not give money
without the expectation of getting something in return. (However, if you are
the sort of person who merely likes to give money away, please contact
me!) If money is given, something is expected back in return. In
this case more money. The way to get the most money back is to
invest in firms that will put the money to the best use. Of course
others know this as well. As more invest with a firm the value of the
firm's stock rises. In competition for more money, firms will strive to find
better investments. This leads to economic growth, more jobs, and
hopefully a higher standard of living.
Just like a company, we all
need money. We need money to live (food, clothing, shelter) and we
probably want money for a great number of things (concert tickets, cars,
computers, etc.). Thus we need to get money. Finance helps us to
have the money when we need it and even when we want it. Obviously finance is
important if we run our own firm. Here we need to efficiently manage our
resources and know what risks are worth taking. Further we need to know
how to invest and how to raise money.
Even if you never plan on
owning your own business, Finance is still important to you. Finance
teaches us to understand the other side of every transaction. If you
understand what your employer wants, it is easier to achieve this and hence you
are in a better position for raises and promotions. That said, few people
will now work their entire life at the same firm. This can have dramatic
financial implications. Knowing in advance your financial position and
options dramatically reduces your stress in this time of change.
Taxes can take 40% of what we
earn. Making the right investments can cut this tax burden. This is
yet another reason to study finance. Many people find themselves in financial
ruin even though they may be extremely successful in their field. For
example the news is constantly telling us of star athletes who have gone from
making millions to flat broke. Most of these stories could have been
avoided with some basic financial knowledge and financial discipline.
Retirement planning is one of the most cited reasons of why finance is
important. This is because it is so clear-cut. You must invest for
your retirement. Knowing how can prevent needless heartache later.
Ironically, Finance is
important because we do not want to have to worry about money. Marriages
are ruined, friendships crushed, and health destroyed over money worries.
I do not want these things to happen to you. Financial knowledge can help
prevent these problems.
My opinon about
this article :
Why finance ?
Very
important because this can see development company processing data and
financial information to produce the required financial report accurately and
timely coordinating planning, and controls reporting and payment to efficient,
tax liability company acurate, timely and based on government regulation
prevailing.
by mega hariani
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