Simplifying Finance for Everyone: Essential Concepts To Nurture Your Financial Growth


As I had written in my book, ‘Simplifying Finance for Everyone’, money is the most important invention of mankind. It has facilitated in smooth movement of goods and services and lead to prosperity and development of mankind for so many centuries now. Much of what we aspire has a monetary value and so managing money is imperative to anyone, be it a business or an individual. Imagine you wish to go on a holiday to an exotic location. It might cost you more. You need to plan and making necessary savings to meet these costs. Sometimes, your urge to fulfill your need much early, might make you take a personal loan which you have to repay along with interest charges over a period of time. Whatever mode of funding you determine, you would need to plan your savings for future to meet your needs or manage your spends in future to payback the loan amount. Proper management of finances can only help you achieve your objective.

However, managing money is considered complex by many individuals and businesses. The word debits and credits evokes a sense of fear to someone, some are caught unaware of this term or at times some people just want to run away from it. However, against the misconception that people have, the truth is that ‘debits’ and ‘credits’ are as simple as any addition or subtraction. If one understands the meaning of these two terms, assessing your financial performance will not be difficult. Understanding Accounting is the first basic step towards a better financial management and that’s why the importance of understanding debits and credits can’t be relegated.

I always love to call Accounting as the backbone for a strong financial management. But sometimes, Accounting and Finance are used interchangeably. There are other elements of finance which are ignored at times and this could have an impact not just for businesses but also for individuals like you and me. Even if your record keeping and Accounting is up to date, but if you aren’t able to assess your funds requirement properly, you might end up without the required money to run your daily operations or meet your regular needs. Ensuring you have proper funds at all times is quintessential to run your operations without hindrance. Not only that, one has to determine if they will finance their requirements on their own or will they need support from outside, like banks to fund their requirements. All of this is related to managing your funds. Fund management is another aspect of financial management exercise.

At times, you might have to procure assets to run your business operations. The amount of investment required in buying most of these assets is quite significant. It’s critical to ensure that assets that have the potential of giving maximum return on investment are chosen. So, one must understand the tools that can facilitate in decision making process and assessing return on investments (ROI). Even when individuals make decisions on high value asset purchases, such tools can facilitate them in making better choices on asset purchases. This again is related to funds management.

A better funds management and a good accounting and record keeping system is possible through a better planning and controlling process. If you’re able to assess the resource requirements and plan activities properly, it might help you in achieving your business goals. Building Business Plans and Financial Plans can help you articulate your business activities in monetary terms. Activities have to be planned around product or service one wishes to offer. Care has to be taken to price it properly in the market. Also it has to be ensured that it reaches the target customers through different mediums. Your product can be placed in retail stores or can be placed online or can be sold directly to customers. Not only that, with most of the markets being quite big, especially in countries like India, people are to be made aware of the products and services through advertising campaigns and other promotional activities.

To ensure plans are working effectively, they need to be monitored. Proper processes have to be put in place to safeguard the assets as much of the execution of plans are done by different people. While trust is important, but as we deal with money which is so scarce, a good control over transactions is required. Also, the plans have to be monitored against the actual performance to check out on variances and take corrective actions where required.

Similarly, a good planning done by individuals can help them achieve their respective career and financial goals. It will help them have a control over their income streams.

All what is mentioned above covers the essence of financial management. Reiterating my above point, a good financial management relies on a strong accounting and funds managements through a proper planning and controlling. Try exploring the same with my book ‘Simplifying Finance for Everyone’.