So you have to take a finance class—even though you’re a marketing major. It’s the least “creative” class on your course schedule, and you’re not thrilled about it. Or maybe you’re interested in finance but uncertain about your future career path.
The good news is that studying finance exposes students to skills that are widely applicable in the workplace and in everyday life. Even if you’re not in the business of managing other peoples’ money, basic financial literacy will help you manage your own money effectively!
Here are four finance skills that you can take beyond the classroom.
1. Budgeting
Perhaps the most important skill you’ll learn about in a finance course is budgeting. While finance and accounting professionals create and manage budgets for businesses, every individual should know how to use a budget for personal finances. Tracking your income, expenses, and savings will help you develop good spending habits and create a realistic plan to meet your financial goals.
2. Setting Financial Goals
On that note, another important part of personal finance that goes hand-in-hand with budgeting is the ability to set and reach financial goals. While finance professionals may assess projects and determine how a company can reach its financial goals, individuals can also set goals to improve their finances. Short-term goals might include establishing an emergency fund or saving up for a vacation. Long-term goals might include paying off student loans or saving for retirement. Learning how to set and work toward realistic goals will provide peace of mind due to greater financial security and will help you save up for things that are valuable to you.
3. Investing
Financial professionals work with stocks, bonds, and other investments to meet their companies’ cash needs and strategic objectives. In a beginning finance class, you will learn about the trade-off between risk and return, the differences between various types of investments, and strategies for investing on a corporate scale. In terms of personal finance, this knowledge can help you to select smart investments for retirement, college funds, and savings and to stay informed about shifts in the market that may affect your investments.
4. Problem-Solving
In an introductory finance course, you will learn how to conduct various financial analyses using the time value of money, such as NPV and IRR. While you may not use these specific functions again unless you go into the finance field, you will learn important problem-solving skills along the way. The ability to identify relevant information, develop a plan, and solve the problem using the inputs available will take you far in virtually any area in your life. And who knows—you may need to pull out your Excel skills someday as well!
References
Bell, Amy. “6 Reasons Why You Need a Budget.” Investopedia, April 7, 2022. https://www.investopedia.com/financial-edge/1109/6-reasons-why-you-need-a-budget.aspx.
Schwann, Lauren. “How to Budget for Short-Term and Long-Term Financial Goals.” NerdWallet, July 20, 2018. https://www.nerdwallet.com/article/finance/short-vs-long-term-goals.
Silver, Kaleb. “The Ultimate Guide to Financial Literacy.” Investopedia, July 18, 2022. https://www.investopedia.com/guide-to-financial-literacy-4800530.pees
