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Financial Fundamentals
If you have received any type of basic education, you should be able to add and subtract numbers. Don’t feel chastised by this sentence. You’d be surprised to find out how many intelligent people just like yourself break down on this principal when it comes to their own financials. Have you ever wondered why computers are used so much in financial institutions? - After all, the simple action of adding and subtracting numbers is what it boils down to when it comes down to managing money.
But before you get to use math, there is another important enlightenment you must experience: Financial management has absolutely
NOTHING to do with emotion and everything with math. Why am I saying this? –
Because all too often we, humans, are driven by our emotions instead of our logic. If you ever studied the human evolution you’ll notice a strange absence of mathematic principals and equations from the history books. That is, because it is not in our DNA, our fundamental human heritage, to be logical about everything we do. As a matter of fact, we are created with instincts that were developed far, far in advance of our ability to think
logically. This is what makes it so hard for us to ignore that attractive offer from the home-theatre store or the sleek new sports car at the dealership or jewelry that glitters and shines so brightly and screams “take me home”. In nature, we were first driven by our instincts and learned to think logically long after we learned to survive.
At the risk of disappointing you, financial management, contrary to common
beliefs, does not start with accounting and investments. True financial management starts with the ability to resist, the awareness of emotion and the departure from the urge to jump on the next big fad and get the newest, biggest, latest and greatest of everything.
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Copyright (c) 2008 by In Scope-Solutions,
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