Why study Finance
From a micro point of view, finance is a practical application of economics. Financial system highlights how we an individual as well as an economy allocate money to the highest valued use. From the English language it’s a focus on how individuals, businesses and governments raise money essential to do business. After studying various topics in finance, it comes to light that finance assist in answering questions on corporate life and personal life. In the corporate sector finance answers questions such as how do business finance operations? And how can financial techniques improve decision making in an organization? In order to answer this questions financial studies elaborate on strategies, portfolio planning and manufacturing which are all crucial topics in the operations of most firms. In relation to personal life, financial studies mainly focus on questions relating to how individuals should invest money (Fred & Eugene, 1972).
Finance as an academic course provides a good framework to understand the key functions of finance. It also focuses of the key concepts in finance which are important in carrying out economic, accounting and business functions. To better understand these major life concepts, the course develops a baseline to introduce financial instruments and a chance to expose financial techniques. Some of these techniques include financial markets, international marketing and corporate financial tracks which are not only essential in the private sector but also crucial in trade markets. Further, finance study provides basics required for efficient payment processes required for exchange of goods and services. It also consists of major topics that assist in providing mechanisms required for economic transfer of resources. Transfer of resources affects issues such as life cycle allocation meaning that the topic provides analysis of consumption and savings which are crucial in today’s economic stability. It also brings light to various ways of efficient allocation through specialization which to allow maintenance of priority list and resource maximization. On further understanding on the topic, broader topics on strategies of pool funds for large scale project and management of uncertainty beneficial for risk bearing are better understand. With the wide knowledge that finance handles I strongly feel that the course is beneficial to my life and to the achievement of my career goals.
Application of finance
Similar to all business, we all require money. Money is essential in attaining basics like food, clothing and shelter also be also want more money to attain great things in life like big cars, computers and so on. Therefore, since money is needed by all paying close attention on how to get it can be a big plus to our lives. Finance in this case come in and assists us to get more of it, it provides knowledge on how to get it as well as how to utilize it better. (Lawrence, 2003) From a personal point of view, finance study is essential to me if I decide to earn money by opening up a business or by getting employment from another company. Because I hope to open up a business to increase my income finance skills gained from the course will assist to improve resource management skills for my business, reduce and properly handle risks. It will also provide clear understanding on the possible ways of investing and reinvesting after profits have been raised and besides provide possible ways of raising funds such as capital and expansion resources. Further, since I would also like to better my career by working in a reputable company, financial studies gained from this course and other related financial trainings. Will not only help me land a good job and maintain career development but also assist me in understanding what my senior expects of me. As a an excellent employee, financial skills will also basis of understanding every side of a transaction hence beneficial in understanding job descriptions and evaluation as well as personal transactions (Hull, 2000).
Further, understanding financial concepts will also assist me in other areas such as tax reduction. It is evidence that taxes take about 40 percent of an individuals’ income, therefore understanding the various ways of tax reduction will a major step to reducing the tax burden. There are several stories in the news today of successful persons who have gone broke, I strongly feel that one of the main reasons as to why this happens is making of poor investment decisions. Therefore, understanding financial concepts, techniques and expected outcomes will minimize my chance of facing major financial crisis in future. Rather than financial crisis, there are other challenges in life that are brought about by lack of proper money handling such as friendship crushes, marriage ruins, poor health over money worries and so on. Financial knowledge will provide a good basis on how to minimize these issues and also provide faster solution in case they seem to happen. Retirement planning is one of the major topics in a financial course (Glasserman, 2003). Finance argues that it is essential to invest for our retirement. Bottom line, finance trends to touch almost every stage of our lives beginning with provision of basic needs, career development, comfortable living and retirement. Therefore, study of finance is not only important because I do not want to worry about cash but also because it assists in preventing common life problems.
Glasserman, P. (2003). Monte Carlo methods in financial engineering. Springer-Verlag
Fred, W. and Eugene, B. (1972), Managerial Finance, Dryden Press, Hinsdale Illinois,
Hull, J. (2000). Options, futures and other derivatives (4th ed.). Prentice Hall
Lawrence, G (2003), Principles of Managerial Finance, 10th edition, Addison-Wesley Publishing.