Financial Management has taken a lot of forms in the past couple of years. There are are several approaches and schools of thought that claim to be the best in our modern time. This is a healthy problem as it manifest’s the willingness of consumers to handle their finance the proper way. This eagerness to apply sound financial decisions covers the whole range of individuals to big corporations.
Even companies are dealing with finances every minute of the day and would greatly benefit from technical know how on handling money. But another way to practice financial management is to know what to avoid. As testament to this, there are companies filing for bankruptcy left and right just like the biggest power company in Texas – Energy Future Holdings as reported by Reuters.com.
If a big company ran by a lot of talented individuals encounter problems, what more individual consumers that deal with their finances on their own? There are financial fears we deal with when it comes managing income, expense, credit and debit and anything related to our finances. One way to get over this fear is to know financial mistakes to avoid. If big companies are on a lookout for these things points, consumers would benefit from avoiding them as well.
Points to avoid in financial management
There are finance tips we can take to heart to help us get through the everyday financial jungle. But knowing items to be avoided by big companies would benefit individuals as well. It would give us an idea on what to avoid in our own daily finance decisions.
Entrepreneur.com recently released an infographic article on the most common finance decisions companies need to be on guard against to keep their finances in check. Individual consumers can greatly benefit from knowing them as well by applying them in everyday finance decisions.
Scattered information
Some companies have a wealth of finance information that would greatly benefit them in the daily operation. It can guide them and provide accurate numbers to make timely decisions. Though these are all beneficial to the company, it would do little good if access to them takes a lot of time than needed.
Some businesses have the information scattered at different points in the company. Consolidating them and making informed decisions on the future of the company is critical. This would affect lives of their employees and consumers as well. It is very important that they are able to streamline information to have access to it anytime.
This holds true for individuals, you need to have access to vital information about your finances. Income, expenses, credit and debit details are important to know anytime of the day. Before making that credit purchase, you need to have access to information about your past credit purchases. Have you paid them off, is it still at 0% interest rate and so on. Applying this attitude in other financial areas in your life would greatly benefit your decision making.
Departmental clusters
Big companies have different departments for different functions of the business. Sometimes they are located in different floors and even in separate zip codes. This is a challenge in running a smooth operation when inter-department communication eat time. Even sending and receiving emails takes away so much time. Radicati.com release a survey forecast that shows email accounts will increase to 5.2 billion in 2018 from 4.1 billion this 2014. The number of emails as well per person will increase from 121 this year to 140 in 2018.
This is why companies are taking advantage of modern technology to take advantage of collaborative platforms rather than waste time sending and receiving emails. This is where individual consumers can learn a lot. This is especially true for those with a big family with a lot of members.
Communicating with every member of the family is integral in sound financial management. Everyone has to be on the loop and bring something to the table in making financial decisions. It should be a collaborative environment and not a one way form of communication where someone commands and the others just follow. This would work best when every member gets to have a say in the matter and the decision is one made by all.
Poor expense tracking
Some companies lack in their efforts in expense tracking. Income generation is key but in goes hand in hand with expense tracking. Revenue leakage has to be addressed to maximize income. This is where some companies are putting their efforts into to curb unnecessary loss.
Consumers need to be aware of their expenses too. More than concentrating how much money to earn in a month, it is essential to keep track and and practice a healthy spending habit. This attitude will pinpoint expenses that can be tapered down or completely stricken away from the list. Do you really need a second box of that snicker’s bar? This is a great way to practice making good financial management decisions.
Old financial data
Some companies are addressing the fact that the speed and accuracy of information they have must be pristine. Not only should it be fast but it must be accurate as well. Getting one wrong will be of no use to the company and might even put it at risk. Getting an accurate latest sales report an hour after the a potential investors meeting is just as bad as receiving an incorrect information on time.
Same holds true for individual consumers. You need to have the correct information at the time you need it. If you are contemplating a credit card purchase and need to know your current balance, interest rate and monthly payment amount, you need to get those correct information at the right time to make a sound financial decision.
Consumer take away from big company policies
Consumers can learn a lot on how multinational companies and even local shops run their business. The approaches they take and most especially the points they seek improvement on can have a positive effect on personal finance management fundamentals. A Forbes.com article shares some helpful habits that can benefit consumers as well.
- Know where you stand – More than living a frugal lifestyle, one way to keep your financial management practice in check is to be on top of your finance details. Be sure you know what your payments are and how much you have in the bank and how far off you are in your financial goals.
- Automatic debit – Setting up automatic debit can work wonders for your finances. It eliminates the need to constantly transfer funds on your own. Just be sure that the main account where all the transfers and payments will be originating from has funds.
- Adopting a finance mantra – There are a lot of mantra or beliefs about personal finance and the good thing about it is that you can choose what applies to you. You can even make one up on your own to use. The idea behind is to stick to a belief that will benefit your financial management goal.
- Set a goal – Almost everything in life needs a goal to aspire to to have a direction. And that goes the same for personal finance. There must be a target with for all the hard work. It could be a house, property or even becoming debt free.
- Stop overspending – Curb useless spending by keeping your credit card in check. You can use cash and debit card to make purchases as well to help prevent buying things you cannot afford.
- Gifting yourself – It is a great idea to reward yourself but not with expensive items you will regret in the future. Reward could be in the form of nearing a financial goal or adding more to savings, retirement or emergency fund.
- Master list – Before walking into a commercial establishment to purchase, you must already know what you will buy. It helps to have a list to help you keep track and eliminate unbudgeted purchases.