There are two types of financial management: business and personal. Both types are centered on the effective management of income, expenses, debt, and investments. The type of education required to learn financial management differs between the two types.
Business financial management is learned through post-secondary education in accounting, business, or commerce. The courses offered in these programs provide the foundation of knowledge required to manage the finances of a company over the long term. There are also wide ranges of specialized courses that focus on issues that are unique to different industries.
The best way to learn more about financial management is to obtain a position in the financial services department of a company. You will have an opportunity to study their business process, decision making, and rules. Over time, this perspective will allow you to understand the materials covered in your business school courses in a more comprehensive way.
It is important to remember that the role of the finance department depends on the type of finance activity that the firm is engaged in. A company with a large amount of investments manages their funds in a different way than a business with a cash flow problem and dropping revenues. The ability to manage both these firms with skill is critical to a successful financial manager.
Personal financial management is the short- and long-term management of your household finances. This is an area of weakness for the majority of people, as money management skills are not taught, but gained through experience. To learn how to manage your finances, there are three options: books, financial planners, and credit counselors.
There is a wide variety of books, podcasts and television shows available to teach you how to manage your finances. Invest the time in this important skill to avoid too much debt, cash flow problems and living beyond your income. Money issues are the main cause for divorce and create a great deal of stress and anxiety.
Professional financial planners provide an independent opinion and develop a financial plan for you. The plan is based on your income, expenses, and goals. Working with a financial planner will teach you management techniques to help you increase your wealth and spend your money wisely.
Credit counselors offer courses and individual counseling on personal financial issues. Their role is to help you reduce your debt, manage the money you have and live within your means. The sessions are free and can provide the framework for successful money management.
