Fundamentals of Financial Management: A Guide to Building Wealth
BY DERIN PHILLIPS
Financial management is one of the most important responsibilities of any individual; most important for a creator and / a business owner. The consequences of a single bad financial decision are too serious to even be imagined, and it may be inevitable that negative consequences will be the direct result of any form of financial mismanagement, large or small.
We also need to be aware that it will not only take a new set of resources / tools to straighten out the bent rod, but also a high level of emotional support (from people or people close to that individual in crisis, or from his or her. own personal support system), intelligence and discipline. The importance of financial management in an organization cannot be overstated, given that there is no efficient and successful business / organization without good financial management.
As an individual, you certainly shouldn’t be spending above your income bracket unless your desire is to dive straight into a deficit tunnel. Likewise, an entrepreneur should not spend all the profits of his business either; he must strive not to consume all of his financial assets, especially on frivolities.
In the future, taking into account strategic planning is more than a little crucial for every business, as it creates room for transparency, growth and good management of resources.
In this article, we’ve documented four basic factors that can help you with your financial management. These factors include:
-Thirst for knowledge
– positive state of mind
One question I thought about frequently is: if the key to building wealth is so simple, why isn’t everyone rich? I realized that the answer to this question is quite simple – success in building wealth ultimately depends on financial discipline and the habits of the individual or people involved. We need to understand that it takes great discipline and a high level of commitment to one’s goal (s), to have a healthy financial habit. This will often require a lot of sacrifice and effort.
John Jacob Astor, the American business mogul, once said: âWealth is largely the result of habit. Therefore, in order to acquire wealth, you must also acquire financial discipline. These financial disciplines can include, but are not limited to:
Learn to say “no”: Many people underestimate how much learning to say a simple but firm “no” is a big step in financial discipline. If something doesn’t align with your goals and dreams, it will likely prevent you from moving forward. it’s a distraction and you absolutely have to say no to it. We only have to say yes to things that are directly, positively, related to our goals.
Discipline ourselves against secondary distractions: These secondary distractions are, for example, families and friends of ours spending money just to impress others, our neighbors with all the flashy cars and designers but nothing worth showing for that, our friends who buy the latest gadgets to show off but are barely able to pay their rent. When making any purchasing decision it is important to make sure that we are not trying to live life as dictated / influenced by others.
Discipline ourselves in our savings: One thing to note is that the moment you decide to build your wealth, you should immediately take steps to achieve it: an important step is to open a dedicated savings account. Create a savings account, decide on a particular amount that will be dedicated to that account (at some point), then last but not least, apply extreme discipline to avoid that money. You will find that you can actually save a lot more money if you are determined to put in the effort. Once you make a commitment to building wealth, you will find that many items in your budget can be reduced or even eliminated.
THIRST FOR KNOWLEDGE
There is a popular saying that our state of mind is always the first thing that needs to change before we can truly tackle larger transformations in our lives. And I totally agree.
âEveryone has the ability to build a financial ark to survive and prosper in the future,â Robert Kiyosaki, author of Rich Dad, Poor Dad. He goes on to say that you ââ¦ have to invest time in your financial education to build an ark with a solid foundation. “
An important factor that we must take into consideration is that the first step towards creating wealth from scratch is to invest time in our financial education. Make a habit of reading books, listening to financial podcasts and interviews, taking classes, and following educational financial blogs. Keep in mind that financial education should be a lifelong activity like any other type of education. You must be prepared to never stop learning.
Like the other factors, it also determines the path to be taken, while on the way to financial freedom. To be successful individually, we must identify our strengths and weaknesses. This same rule applies when trying to draw a savings plan. We need to determine a particular amount that we can save periodically, so that we don’t miss out in the long run. The choices we make before attempting an action, any action, is a discovery in itself. It is a self-discovery that determines whether or not you will be comfortable saving a particular amount periodically. Additionally, we can strive to gain more knowledge and be better at things that we are not. We have to look within ourselves and look within for the greatest and best versions of ourselves.
More or less is like launching a choice survey. I agree that thinking deeply about all of this is no small feat; the more so as it deepens day by day; but it also gets interesting, and that is why we have to know that the most important method to process all of this information is to “find what you are good for or what gives you satisfaction”, convert it to wealth and become consistent with him.
A POSITIVE MIND
To keep all the plans mentioned above intact and keep a positive mind, we need to keep a positive mindset. To be bluntly honest, life can be full of uncertainties and it goes without saying that life can be really bad, even horrible, on some days. But ultimately, we all need a ray of hope: a bright light that lights up to show us the way and to revive our hopeful hearts. We must constantly remind ourselves to strive to be better, no matter what life throws at us. A positive state of mind fuels greater reverie, it fuels the heart and soul, and it fuels the body. It motivates us, gives us the energy to keep it moving and physically, it strengthens the bones to stay in shape.
In conclusion, if you’ve ever wondered or wondered how to build wealth out of thin air, understand that it’s not rocket science, YOU CAN DO IT. All you need to do is focus on financial discipline, thirst for knowledge, self-discovery, and a positive mindset.
Derin Phillips is a financial and investment manager, CEO of Wavis Investment Ltd.