Education and knowledge of finance is very important for the survival and growth of a business and even for an individual. Earlier the concept of finance was considered for the business entities but it touches every aspect of modern human life.
Most people believe that finance education is for the people who are already rich and have loads of money but the truth is no matter how much or how little money you have this education will help you managing your finances and you will be in a better position to take your financial decisions. Knowing about finance is related to the knowledge of credit, debts, loans, investments and returns which will also help you to identify the opportunities to make money or save it.
Financial security and financial freedom comes from the way you understand your finances. There should be a right balance of savings and investments. Savings can guarantee a financial security for some time but it the right investment which will make it grow. Smart investors know how to make even debt work for them. They can make money from others investments only with the right knowledge and expertise.
A lot of people put money in their savings account for long period of time assured that its safe and earning them some interest. But what use is it when it does even come up to the rate of inflation. You can always put that money into better use with the right investments. Now what are right investments – Any investment which can make you short term or long term money (capital gains) can be called as investment. Some of the investments involve high risk and some of them have low risk. Usually the higher the risk, more the return. So a good investment could be a balance between the risk and the return you expect.
Knowing your finances can help you manage your personal and business goals as well. Its important to know the right difference between the assets and liabilities as given by Robert Kiyosaki, asset is something which can give you an income or help in creating an income over a period of time and a liability will make you spend on it.