Financial Management

Financial management involves the proper use of resources in planning and organizing activities of an enterprise or an individual. There are principals the guide individuals or corporates to enable them to achieve sound financial management. If not adhered to, one might end up making losses in businesses, developing poor spending habits or making a wrong investment decision.
There are laws that if adhered to can lead to financial success; one of them is to earn more money than you what you spend. Most people and companies in many cases find themselves overspending their earnings. They, therefore, end up in debt because they don’t have any surplus to pay the debts. Such companies lose investors because no one is willing to fund an organization that is continuously losing money. Small businesses end up collapsing because the proprietor uses all the lifetime savings and capital to keep the business running.
Another rule of proper financial management is to invest the surplus. Most businesses perform well and make huge profits, but they use the money in buying new equipment, hiring more personnel and paying for training programming for their employees. Even though these practices are good and healthy for the company they do not guarantee continuous flow of income because they are all expenses. Good management will advise the company to invest a portion of the profits in other businesses to enable them to generate more revenue. Same applies to individuals who use all their money in buying new things instead of investing to get more.

Always know what your money is doing or where it is going. This is another important principle when it comes to financial management. The business owner makes money but cannot account for it. It also happens with corporates which don’t have an idea what there is doing, whether thy making losses or profits.(www.forbes.com)
Work Cited
“Forbes.” Forbes, Forbes Magazine, www.forbes.com/sites/matthewgarrett/2013/10/16/three-fundamental-laws-of-success-in-financial-management/#.