Why Learn About Finance?

Most of the time, if you are a non-accounting and non-finance professional, you can get through most days of your life without having to think much about topics that touch the finance and accounting world. However, as you move through your professional and personal life, there will be times when you absolutely should be familiar with accounting and finance terminology. There is nothing worse than finding yourself in a professional situation where you do NOT take action because you do not understand this world. You get caught with financial repercussions in a role where having a baseline understanding of these concepts would have helped you avoid pain or embarrassment. Why would anyone other than a geeky, numbers-oriented, pocket protector-wearing individual want to know anything about the world of accounting and finance? You might be thinking, “I can have a perfectly nice career not knowing anything about this topic.” Why should you be open to this information that can bring tangible results to your life and career? Here are a few very tangible reasons to learn about this topic, no matter what your training or background may be in the world of finance and accounting. Since learning is an activity that requires an investment of time, anyone learning a subject must identify reasons why you want to invest in a topic of study, especially since accounting and finance are topics that, on the surface, feel too difficult to comprehend. As you read these reasons, your job is to assess how much these ideas align with your circumstances. Any learning inquiry must have a significant “why,” or you will not follow through with learning. Starting a business may be your goal. Starting a business may require a significant investment of energy from a person in time and other resources. Small businesses often fail because of fiscal management challenges, especially in terms of cash flow management. Thus, learning about the financial aspects of planning and running a business is crucial to your success. In starting your own business, you will want to know some specific things about finance, such as planning finances, assessing financial statements, and the essentials of cash flow management. People have started businesses with varying levels of financial understanding. Still, those who are successful over time have to understand finances even if they do not keep the books and do the accounting. In starting your own business, you may want to purchase an existing business. One of the reasons you may want to do that is because you do not want to go through the start-up pains. However, you will want to know how to read financial statements and specific questions you want to ask about the business’s financial model in purchasing a business. In this book, you will learn how to do these critical pieces of analysis, OR at the very least, you will feel comfortable hiring a professional to help you! For some individuals, you want to study financial information regarding companies that you can invest in with the stock market. Examining financial information is a fundamental analysis that can help inform you about your investment decisions. For most people, these decisions are made by fund managers, and then you can buy into a fund of different stocks. But someone is doing this analysis, and you can learn how to do this analysis if you want to make your own decisions about investing directly in companies. In addition to investing through stocks, you may own a business someday and decide that you want to grow your business. One way you can develop a business is to purchase another company like yours or invest in a complementary business. When you merge with or acquire another business, you will need to assess financial information and dig into the financial backbone of the company. Either way, you will use the same approach for financial analysis.