Basics of Finance: Beginners Ultimate Guide
Well everyone talks about finance’s this and that, but we will cover the basic foundation on which finance stands. There are a lot of topics in finance but these stand out from the crowd. And if you’re out on a date and have not spent an enormous sum of money, then thank this article.
5 Topics to understand finance within 24 hours
- Income: The concept of income is pretty easy to understand. A person or organization must provide some product/service in exchange for money. But there need to be at least 2 parties involved. One selling the product/service and the other is willing to buy that. Now, willingness is important because the person selling just cannot force their product/service cause no one will buy it. The need to fulfil willingness is necessary. And if it is met, the income is received in the hands of the seller. So, you must earn income to go out on a date.
5 ways to earn income in 2024 are:
Affiliate marketing
Start a podcast
Freelancing
Blog
Boring job (but underrated)
2. Spending: It is an important topic to understand and why people can’t control it. It is the process of buying a product/service to fulfil our basic desires, wants or needs. The above explanation seems easy to understand but in a practical way is hard to control because people have so much to burn their income on.
5 ways to control your spending:
Make a budget.
Cut your wants and desires.
Don’t go out quite often for a meal.
Give a thorough thought before buying something expensive.
Start saving more.
3. Saving: Well, we have reached to the most underrated of all financial concepts. “Every penny saved is a penny earned” would sum savings. Saving in simple terms means the “threshold of money left after spending” (Income — Spending = Saving). If you can save consistently, you can survive a financial crisis. The real power of savings is reflected during recession and depression.
“Do not save what is left after spending; instead spend what is left after saving” a great quote by Warren Buffett
4. Investing: Some people call investing art or science, but it’s commerce. That might be a bad joke but investing is not. It involves a lot of reading, understanding and skill to master. Just simply putting your money into something that is trending is not a good investment.
But investing basically means using money to earn more money. Quite easy huh! Yeah, this is the concept. Putting money where one thinks that it will grow. This is one of the ways in finance to create infinite wealth.
5 things to invest money in 2024:
Stocks
Bonds
Fixed Deposit
Commodity
Real estate
5. Debt: Debt is like a student who has a bad connotation attached to it. Debt in layman’s terms means money taken to buy/spend on things. It is to be paid later on because it’s not our money. Debt is not bad altogether. It depends on the situation. It can be used to buy things which are out of our financial reach now. For example; if John wants to buy a car which is $250,000 but he only has $200,000 he can take a debt of $50,000 to buy that car.
But obviously, there is a bad side to debt which is described beautifully below.
“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt” — Henrik Ibsen
Conclusion
The above topics discussed are the basics of finance which everyone must know about. Finance as a subject has been a taboo for so long. Being complex and lack of learning makes it even more difficult to understand at some point. So, before taking any financial decision, just remember these points as they can make or break anything.
