What are finances?
Companies require material or financial human resources, whether small, medium or large.
The role of finance will be oriented to financial resources, since money is a resource to acquire assets, cancel immediate and long-term obligations.
To generate cash flows, it is necessary to generate income from cash sales and portfolio recovery, contributions from shareholders or owners, hire loans, sell unproductive assets, among other items. These funds will be used for the purchase of inventories, fixed assets, payment of obligations, distribution of dividends, etc.
The finances consist of three interrelated areas:
a) Financial Markets.
A large number of finance specialists decide to work in financial institutions, such as banks, finance companies, insurance companies, mutual funds and brokerage houses.
b) Investments.
Other specialists choose to work in consultancies, in which they are dedicated to advising individual investors on the best way to invest their funds.
c) Financial Administration.
It is the widest of the three areas and the one that offers the greatest number of employment opportunities. Financial management is very important in all types of companies or businesses, since it includes industrial, commercial and service companies, both in the private sector and in the state.
In order to achieve an efficient administration, it is necessary to have clear knowledge of the objectives and policies of a company, which are generally determined by the shareholders who, in coordination with the administrative group, assign duties and responsibilities, delegation of sufficient authority oriented to Maximize the interests of the owners by maximizing the available resources and capital invested.
The key to success in any field is to be firm with the objectives set and to fight until reaching them. And financial goals are not the exception. We must consider a long-term financial horizon, which we will build on a daily basis.
After two months have passed in 2018, it is important to analyze how the finances are going so far this year. Think of the following questions: Have you saved as you planned? Do they keep track of their income and expenses? Do you have investments? Have you foreseen a long-term financial plan? Do you monitor your financial goals? Do they know precisely the interest rates on their loans?
To maintain financial control it is essential to understand the following 10 basic principles of personal finance:
The golden rule for maintaining healthy personal finances is to abstain from spending more than what is received, since, otherwise, debts are incurred and it is difficult to build a solid financial base.
Spend the money sparingly, which means that purchases must be adjusted to the level of income and what is truly necessary. In addition, it is important to have a contingency fund, save and invest.
In order to save and invest, it is essential to understand the difference between these two concepts, as they are often confused. Well, saving refers to saving part of the money, while investing means placing the money to produce returns, assuming a certain risk.
As we talk about how to meet goals, we tell you some tips to do your financial planning in this 2017
- Invest analytically. This involves studying the risks, advantages, disadvantages and opportunities of the investment. When investing, the following must be taken into account:
If there is no understanding of financial products it is better to stay out of them.
Each investment has a different level of risk, the higher the return, the higher the risk.
Seek professional advice allows you to make more accurate decisions when investing in trafficking.
The investment portfolio must be diversified.
You have to be very attentive to the "investments" that offer interest well above the market rates, since in recent years scams and the known "pyramids" have proliferated.
- Have a pension fund, since, in the long run, this figure represents the first approximation to economic security when retirement age is reached. It is better to start trading in a pension system as young as possible, to build a stronger fund.
While it is true that the pension will be an economic pillar for the future, it can not be the only source of income when it is laid off, so it is necessary to accompany it with long-term investments.
If you are thinking of building a safer future, be aware of this error when looking for the down payment to buy a house
Create a financial calendar, that is, in the same way as the car you have to check it every time you have traveled certain kilometers, it is also essential to include periodic observations of the evolution of financial goals and, if necessary , take corrective measures to guarantee compliance.
Be aware of the interest rates of our debts, since from a financial point of view it is better to pay first the loans that have the highest interest rates. Another advantage of knowing the interest rates is that we can renegotiate and obtain lower rates, which would lower our level of expenses.
Surround yourself with people who are successful, have charisma and are a good example to follow, since this allows them to learn from their experiences and have points of reference in the financial horizon.
To insure the patrimony, because an unforeseen event could generate heavy financial losses, for which reason it is preponderant to have a health insurance - since you yourself are the main income manager - and an insurance to the properties that have a value high as the house and the car.
Dedicate part of the time to do some kind of physical exercise, such as practicing a sport, walking, jogging, cycling or going to the gym, as this allows you to be more active and productive.
Remember that your goals will be the fruit of your discipline, perseverance and effort.
With the arrival of the end of the year, many people lower their guard in several ways. They eat that succulent chorizo more often, they take more than usual, if they smoke, they forget about the abstinence and they increase the consumption of tobacco. A few months later, with the arrival of January and February, they go to the doctor, discover that they overreached and start dieting, quit smoking (for the umpteenth time) and return to the gym. And they fall into a vicious circle every year.
The same goes for finances. The last months are a provocation and a temptation difficult to avoid. There are the promotions to buy 'cheaper' gifts, start thinking if it was time to change the car, to make a trip abroad, to give yourself that 'repressed' taste for paying credit fees and working to pay your main expenses .
The arrival of November marks the last season of the year's expenses. This time it deserves all your attention to, first, make an adequate use of resources taking into account the festivities and obligations of 2016 and, second, prepare to face 2018.
It is not a secret that November and December come with an increase in expenses caused by the celebrations of Christmas and New Year. In this regard, Rodrigo Nadal, manager of Solve your Debt, credit repair entity, states that: "during the season it is possible for people to increase their monthly expenses taking into account festivities, gifts, travel, among others. This is valid as long as you know your own financial situation in depth and the expenses are made with planning and awareness, without incurring obligations that last longer than the same celebration and that make it difficult for us to face the new year ".
In total there are eight questions of the financial check to which you must answer YES or NO according to your situation, remember that each negative answer is a point at which you should improve:
Do you have a monthly budget and follow it?
Do you know where and how you spend your money each month?
Are you up to date with paying your debts?
Do you know your status before the credit bureaus?
Is the balance of your credit cards decreasing?
Are you currently investing in an instrument?
Do you have enough savings that you can easily access in case of an emergency?
Do you know your protection needs and have the insurance that covers them?
After doing your check, keep in mind the weaknesses found when planning your end of the year season. Take note of these tips:
If you do not have a budget, it is time to do it both to plan the year-end expenses and to prepare for 2017. The proportion recommended by financial planners is 70-30: 70% includes housing, food, health, education and transportation, and 30% is distributed in savings, entertainment, personal tastes and payment of debt.
If you have past due debts, your credit card balance is high and you receive a premium in December, one of the options is to try to catch up and / or pay your obligations with the extra money you receive. The surplus can be used in end-of-year expenses.
If you do not have an emergency fund yet, it's time to start it. Remember that this must contain resources to live quietly for at least six months in case of emergencies, loss of employment, illness, among others.
If you do not have the necessary insurance to protect your future, your family or your heritage, it is time to investigate and choose those that guarantee the quality of life and tranquility of you and your family in case of calamities.
If you do not invest your money yet, keep in mind that in the market there are several instruments with different levels of risk, depending on your needs. The important thing is that you choose those that yield higher returns than inflation so that money does not lose its purchasing power over time.
Remember that the check can be done as many times as necessary until a good personal financial planning is achieved.