Finance Is: Definition, Functions and Benefits! For a Better Life

Financial Is: Definition, Functions and Benefits! 3 For a Better Life

Posted on

Financial is a term related to financial affairs. When it comes to finance, you can’t be separated from the economy. Finance is one of the fields in economics that focuses on finance.

So that you can understand financial topics in depth, let’s look at the following reviews of the meaning, functions, and benefits.

Financial Definition

From the point of view of financial science, talking about finance means that you will discuss how to study the financial condition of individuals, businesses, or organizations. Starting from managing, increasing, empowering sources of funds, allocating funds according to posts, to calculating risks and prospects in the future.

Finance can also be viewed from the administrative aspect. In this context, finance is how to manage money in and out of a business or institution. So, you will find the term financial management, which is a series of company activities, starting with how to get funds, use funds, and manage company finances as a whole.

A financial condition is said to be good if there is an orderly management system that can be accounted for by the related parties. All aspects related to the management run optimally, so that financial freedom can be achieved. Financial freedom means that an individual, business, or organization is free from debt, has a steady source of income, and reserves that can be used for unforeseen needs.

Financial Function

As a productive age workforce, you need to know what the function of finance is in your personal life. It is a big mistake if you think that financial management only needs to be applied in a business or company. Before going any further, first understand what financial functions you can apply in your personal life.

Planning Function

Life is easier when everything is planned. While it’s fun to be spontaneous sometimes, that’s not the case when it comes to finances. Focus on the main needs that must be met, balance income and expenses, and avoid planning that is purely wishful thinking. You need to adhere to these three main principles, so that existing funds can be managed optimally.

Control Function

Even though the limit for each post has been set, there are times when we are easily tempted to tamper with the numbers that already exist. This is where the financial function as budget control. If you neglect this function, it is not impossible for your spending plan to swell and result in unhealthy financial conditions.

Inspection Function

Budget control needs to be followed by budget audits. Regular checks on the inflow and outflow of money in your finances will help you spot errors early on, including overusing funds.

Reporting Function

Does personal finance need financial reports? Although the answer depends, but by making similar reports you can see and observe how healthy your financial condition is. The key, expenses must be smaller than income. So, reducing expenses needs to be done so that you can achieve a stable financial condition.

See Also : 5 Best Sources of Income Businesses Use Smartphone

Financial Benefits

Then, what benefits are felt if finance management is applied in your personal life?

Get used to the frugal lifestyle

Living frugally is not the same as being stingy. Saving also doesn’t mean you live a tight life and ignore your own happiness. Living frugally shows that you are sufficient and all basic needs have been met.

Put obligations first, manage finances carefully, eliminate desires that can be postponed, and control debt as much as possible. That’s the real frugal lifestyle.

Practice Discipline and Regularly

Finance benefits are how proper finance management makes you more disciplined. Starting from planning finances, controlling expenses, and managing the development of funds for future needs. All things needed and wanted have been planned in detail, so that order brings peace of mind within you.

Avoiding Debt Habits

Honestly, increasing needs often tempt you to go into debt to meet those needs. However, is debt or credit always the only way? Of course not, especially if you are able to manage your personal finances properly. The risk of the emergence of debt can be reduced to a minimum.

See Also : A Job In Equipment Finance : What Do We Have Here ?

Have More Optimal Future Planning

Managing finances will help you have more optimal future planning. The logic is this, you can save money, live well and be debt free. From there, you can plan for future needs and act now by starting to develop funds.

Now you know that finance is everything related to finance, from funding, obtaining, and managing funds to being able to produce something. So, if you have more funds, immediately develop funds starting from Rp. 100 thousand on the finance peer to peer lending platform .

Leave a Reply

Your email address will not be published. Required fields are marked *