Explain the term Finance and their Importance? | Why finance is important
Finance plays an important role in our daily life when we all are talking about money “How to Earn”, “How to Manage” and “Where to Use”. These things play a vital role in controlling our financial condition. The concept of finance is all about managing and spending money wisely. It’s like a road map for how people, companies, and governments should handle their money and investments.
What is Finance?
The word “finance” is used for managing the money for future growth like by doing investments, savings, borrowing, banking, budgeting, etc. Or in simple words, we can say the proper way of management of money is basically known as “Finance”.
Well, this is not enough the term “finance” is a very broad term that you should learn about many things like (Investing in stocks, mutual funds, crypto, Golds, FD, ETFs & Index funds, bonds, insurances, etc, and many other), (learn about how interest has been calculated, there are two types of interest Simple interest & Compound interest), (learn about equity, shareholders, debt, compounding, inflation, deflation, depreciation, etc. and lot more things if you want to grow your money.
Ya I know now you are thinking why should I have to learn about these things is there any shortcut to managing our money? Well, there is one option where you can hire a financial expert who can manage all your finances. but according to me be your own financial adviser with your own knowledge.
Well don’t worry guys these things are literally easy you don’t have to invest your whole time in it, you have to invest 10 to 20 minutes only to understand any topic daily by reading blogs, books & watching videos, etc.
Now, let’s discuss why finance is important. let see…
Importance of Finance
1) It helps with financial decision-making
Finance helps us make proper financial decisions so that we can control our money for future growth. It provides us the proper guidance for making our funds secure and it shows us the right way to invest money in a good place to grow money. It also tells about how much we have to spend money from our profit/income because income<expenses is not a good thing, income>expenses are the important and good thing which finances tell us.
2) It helps us to improve our budgets, savings, and our expenses
After getting a good and high-salary job we still living in a huge debt. The reason behind this is the lack of financial knowledge, that’s why finance is very important even if you have a good job or not it helps to control your budgets, savings(which is very important), and expenses.
3) It protects us from inflation
As we all know inflation is increasing day by day, and we can’t do anything about it also our Indian currency is depreciating day by day if we compare our currency with other countries. To avoid these things then we have to grow our money from time to time, now you think how to grow? here is the thing where finance helps you. it gives you ideas of where you should invest your money for growth.
4) It protects you from the emergency Situation
It helps you in emergency types situations like let’s say in your family any member got sick or faced any type of accident which is serious that time you need a lot of money for paying in the hospital if you didn’t have money at that time then the situation getting worse. Here is the only way where finance helps you in it.
5) It gives you the idea of getting retired at an early age
Now you think, how is it possible to get retired at an early age? Here’s the power of finance, in finance, there is a powerful word “Compounding” which helps you to retire at an early age. The word compounding is used for long-term investing consistently.
To get retired at an early age you should have to decrease your expenses and increase your saving. when your income> expenses then you’ll be free, after that you can invest your money from your net savings in a good place for the long-term period like 10 to 20 years and more. you should invest your net savings consistently for a long period. After 20-30 years you can see that your investment has increased a lot, after that you will be free with your money.
Conclusion
The things that I explained in our blog are just for the knowledge purpose only, not for the implemented purpose. you can decide whether you have to implement it or not. I am just providing the information that I learned from the books, blogs, and from other sources.
Well if you like this blog then please comment to us on what thing you like the most or what thing you do not like. And please share this blog with your friends, family, and with your neighbors who want to know about finance. Because this blog is totally about financial education/information.
Thank you for reading our blog 🙂
