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Learning the Basic Concept of Finance from Finance Homework

by Jun 19, 2016Finance

While doing any course in finance, students need to grab the basics to get a clear picture. But choosing the correct coaching/tutor is most important because expert coaching centers will guide you with a proper methodologyandsuitable time table.
Basic course of financial management makes it easier for students to learn higher applications of finance quickly. The basic thingswhich studentsshould learnare described below:

  • Creating Budget

To be responsible for financial matters you have to learn first about budget creation. This will help you to:

  • Manage and enumerate income, savings, and expenses.
  • Decisions regarding money should be taken by considering both current situation and future scenario which may occur due to some changes in economic condition.
  • Knowing how to spend money and how much to spend in a given time interval.
  • Proper savings planning for any unwanted expenses or changes in income.

To create a budget, the main things required are identifying income sources and determining the fixed and variable expenses. Fixed expensesare defined as the expense which does not change with time, and you have to pay it regularly; such are house rent, electricity bill, etc. Whereas, you have to pay occasionally for variable expenses which include buying any item, entertainment expenses, etc.
To remain financially stable, it is important to keep a track of income and expenditure. If your expenses are more than income, then you will become debt ridden. In such cases, you have to either reduce your expenses or increase income.

  • Why saving is important?

As a teenager, you may not understand the values of savings, but once you start paying up for things and services, you realize the importance of savings. Have you ever wondered that why you keep aside some amount of money for your personal expenses? The answer is simple; you are not sure whether you will get money from your parents during your need. Your pocket money gives you the security to cope up with any emergency situation or need.
Although as a student you may not face a difficult situation, as an adult various responsibilities will come upon you and you will start to know the importance of savings. Savings also helps to achieve goals such as you may start a small business.

  • Time value of money

Cost is always calculated with respect to time as in case of salaries, telephone bills, etc. This is an important concept regarding finance. The time value of money highlights the relationship among interest rate, money, and time. This concept gives an idea how a sum of money invested today. The concept of time value is found in simple and compound interest calculation. The main things which should be kept in mind are:

  • Always choose financial companies which provide higher interest rates.
  • People should do investment/savings depending on the present situation/income.

Start saving money when you start earning because this helps to accumulate more interest on the sum invested.

  • Importance of being economical

In these days, people get carried away withvarious advertisement, technologies, and other special deals. Thus, they spend a lot of money in buying things, but one has to understand the relation between need and want to remain financially stable. One must learn about managing personal finance first to get a better insight of the subject.

Fundamental concept of financial management

Financial management refers to directing and planning financial resources of a company. A company gets cash from various operations, and the capital is obtained from lenders and investors. The main things which taught under financial management include:

  • Cash management: Managing cash ensures that financial recourses (in form of cash/asset)are always available with thecompany. Cash deficit can lead to huge
  • Planning and forecasting:For business accurate forecast of expenses, revenues, and profit areimportant, it helps to do proper planning and sets the future targets.
  • Financial reporting:Effective and timely reporting help an organization to take decisions effectively and quickly.
  • Capital structure: New companies often need to get capital from sources like large enterprises or venture capital fund until they reach thebreakeven Larger companies with adequate cash flow get funds from financial institution rather than giving equity shares to investors.

Well, all these are some of the basic concepts that students get to learn from Finance homework. You should do your homework accordingly to achieve this feat. Learn More! Achieve More!