Question

How will understanding finance and making correct financial decisions contribute to your general quality of life? What are parallels between how a successful business manages its money and how you manage yours?

Answer 1

Understanding finance and making correct financial decisions help in making life stress free. Its very imperative that one should expense only some part of the amount that one earns and also saves for the future.

If one does not take care of his finances and makes unwanted expense which one cannot afford by taking loans then one will have likely be in trouble as the interest costs will make a lot of cut from one's income, and this will deteriorate quality of life as one will be in tension to make their ends meet.

Above is the small example, hence to make understanding finance and making correct financial decisions is very important to have a good quality of life.

The successful business manages money by investing in its growth, business will invest their money for example in capital expenditure for expanding their business, if the corpus amount is still left after Capex they will give dividends to shareholders. so that they can invest somewhere else for getting a much higher return. An individual person will in similar lines of business invest in its growth like in education or learning new skills which will enhance his horizon if after investing in his growth he will save and invests in interest-bearing instrument or where he envises his money will grow.