why i study finance essay

why i study finance essay

The Importance of Studying Finance

1. Introduction

A good understanding of performance metrics is essential to help people develop appropriate investment strategies. By learning how money works and through what investment tools, people will be better able to understand how to make the best decisions to preserve and grow their money. Financial education of the population is important in the context of both company requests and the needs of individuals and society in general. Financial education has been the focus of growing attention of international organizations, authorities and governments due to its essential role in consumer protection and maintenance of a sound and stable financial system. Companies always appreciate financial training in new recruits. Getting an education in finance as an undergraduate can give people an edge with thousands of different companies in a wide range of industries. Employers are well aware of how challenging it is to get a finance degree or find someone that is able to do well and be successful in this field of money. The finance industry is filled with people who are only interested in themselves and making money for their benefit. It makes the professionals who actually aim to help others stand out even more.

Nowadays, talking about finance as part of the training of competitive professionals is not only a requirement but a fundamental necessity of life. It is well known that life is uncertain, and in order to be able to deal with the infinite risks that life poses, it is necessary to make use of the financial market where it is possible to insure against the real problems that may arise in life. In this sense, being financially aware is a unique capacity that will confirm the total and correct management of our actions regarding life risks. Finance is present in the day to day, from personal to non-personal in life, to reach the life problems of people or their companies. It has as a great objective the decision of the best allocation of resources involving time and risk. If an individual or company does not consider the financial consequences involved in investments they make, they could be led to incorrect decisions. With sound knowledge of finance, market practitioners will be able to make informed decisions about investment, thus promoting risk pooling and the savings and investment cycle, thereby promoting economic growth and development.

2. Understanding Personal Finances

3. Recognize the real expense. When you start budgeting, you realize the regular expenses and what you are paying frequently. These may include grocery shopping, trips to the vet, rental car, dining, maintenance of vehicles, costly accessories, etc. Once you have all your expenses expected, you will have the option of adjusting your lifestyle quite a bit. You can decide which things can be eliminated. Also, you have an understanding of things for which you are actually paying. By knowing the real cost of owning these things, you can manage services better.

2. You can limit the money by budgeting. Also, within this restricted amount, you have to monitor and control the regular expenses of routine wear and purchases. By budgeting, you can keep track of all expenses. With a budget, you can easily judge where your money is going and buy necessary items instead of spending money on something else, instead of just any shopping desires. Since, as a budget item, any unexpected costs like buying a gift or taking your family to a fun day outside the city must be contained.

1. Budgeting: Lack of money can lead to innumerable financial difficulties. In many families, the earning member is the only wage-earner, and the whole family depends on their earnings to cover expenses. Budgeting helps families see where their money has been spent and provides a plan to reduce expenditure to meet family needs and financial goals. If the balance is constantly running, you can be paying big monthly interest on credit cards, loans, and other accounts.

Several responsibilities are included when planning personal finances. Besides being aware of future well-being and being able to manage several everyday functions, there are several other reasons why we should plan our personal finances:

3. Exploring Career Opportunities in Finance

Budget Analysts: These analysts are responsible for their government organizations, and they evaluate the organizations in which they work to maximize profitability for the money spent and investment. They prepare budgets, manage funds, suggest spending reductions to the different organizations. They work in all industries. Anyone can hire them that prepares and manages budgets.

Securities and Commodities Traders: These traders will buy and sell commodities and securities for their clients. Experienced traders know how to come up with a winning bid. Companies and individuals are expanding more and more into international and global markets, and in this environment, the Securities and Commodities Traders can bring in a lot of money. In securities trading, you will see instantaneous increases in the price of the security. In Commodities trading, wheat, gold, and other items will notice increases in price often influenced by various news sources.

Underwriters: These people are responsible for reviewing current financials of individuals and companies, handling how the organization invests its money, and then deciding the best insurance policy and prices they can offer their customers on their product. They also decide who they should not offer their products to. They help the company avoid high-risk ventures. Agencies and insurance companies are the common employers of underwriters today.

Financial Manager: These managers take care of how the organization’s financial position is doing. They help senior management make decisions about things like growth, stocks, and other things. They prepare reports of the organization’s financial situation. They come up with ways to invest the organization’s money and keep their debt and capital secure. This occupation also includes credit managers and international banking managers.

Career Opportunities in Finance

4. Making Informed Investment Decisions

The corporate sector value maximization goal is not only a challenge for non-entrepreneurial enterprises but also for entrepreneurial enterprises. This is mainly because young companies, characterized by their volatile returns, are unable to use internal reserves to finance their long-term investment projects and thus issue large proportions of external claims. Innovative new projects, created through large investment, can effectively reduce the costs of approval, although they are often less diversified than older technologies. As a result, in diversified companies, investment opportunities should grow more quickly than in less diversified companies. Although some firms, driven by non-entrepreneurs, often adopt growth patterns of profitability with high systematic risks, as the company grows and becomes a mature enterprise, it can start to adopt stability strategies and the company’s systematic risk during the life cycle of the company in the opposite direction. Converge on the profits model.

Finance is arguably the most important part of the economy because it helps meet the material and non-material needs of individuals and organizations. An economy’s effective operations throttle its financial system. The financial system performs various roles, of which four are particularly important: (i) facilitating the efficient transfer of resources, (ii) managing investment risks through the provision of an array of financial products, (iii) promoting the sustainable growth of the corporate sector by maintaining the market discipline of corporations through extensive corporate governance mechanisms such as board member responsibilities, transactional transparency requirements, and shareholder management rights, and (iv) maximizing the economic efficiency of the financial system by burning economic values. Each of these roles has real effects that directly affect economic and social progress.

5. Contributing to Economic Growth and Stability

The performance of the financial sector with efficient fund allocation and real sector operations will drive economic growth. The economic crisis was triggered by the financial sector’s failure to allocate funds efficiently, which caused solvency and liquidity problems in non-financial corporations (NFC). The problem of the financial sector also drove economic growth by reducing investment for the corporate sector operating costs. If this lower investment is not followed by job creation, it will not reduce the unemployment rate but rather increase it. Decisions that appear to panic, such as the delay in information disclosure of the bank, will establish the sound of the banking system. It is important to inspect the performance of the banking financial sector as an important institution. Credit intermediation achieved by the performance of banking in financial systems supports economic growth in Indonesia.

The availability of financial resources can be said to encourage investment, which, in turn, contributes to a nation’s economic growth and economic development. Capital market development, through liquidity, also makes it easier for investment activities to take place. Fundamentally, the availability of credit is the trigger for economic activities. Therefore, the financial sector is responsible for the economic development of a country. From the literature, it can be concluded that liquidity development has positive impacts on economic development in an economy. Very often, the relationship between liquidity and economic performance is influenced by the industrial structure and precise economic conditions. Another study also found that the index of capital market development also has a positive and significant impact on economic growth. This is empirical evidence obtained by applying the Granger causality to the VEC model. The study is in line with results in other studies-portfolio capital inflows, a measure of financial development, stimulates the economic development of a country.