When the word “savvy” is mentioned, it has a lot to do with having good shrewdness (decision making skills,) and practical knowledge; the ability to make good judgments. Therefore, being financially savvy means having practical knowledge and decision-making skills relating to finances. In other words, financial savvy is one’s level of knowledge about financial matters and how he or she makes the right decisions when it has to do withh finance.
Most business owners lack this one skill, because regardless of the amount of finance you have at your disposal as a business owner, if you lack this skill and ability to make the right decisions, when it comes to finance, chances are that you would channel it to the wrong areas, leading to the downfall of your business.
Even the wealthiest people can lose all of their wealth because the value of your assets does not just determine wealth. Even as a wealthy man, entrepreneur or business manager, you need to be financially savvy, because when you don’t manage your money well, you tend to take too many financial risks, and probably lose your money in the process.
Being financially savvy is extremely important, because you need to have good money management skills to increase your wealth by making intelligent investments, rather than making poor money choices.
As a business owner, to ensure wellbeing and growth of your business, make sure you keep a close eye on your finances, both through budgeting and regularly checking your bank and savings accounts for progress.
There are so many benefits that come with being financially savvy, some of which include:
1. Better Finance Decision Making
One benefit of being financially savvy is that it helps you make the right decisions in finance; you’d be able to invest in appreciable assets, rather than investing in any other thing.
Being financially savvy will not let you spend money mindlessly without considering whether what you are buying will make money for you in the future or not. Successful business owners understand that you need to invest your money in appreciable assets, such as property or stocks, not excessively spending on items that add nothing to your investment portfolio.
2. Retains Financial Power
Most businesses have lost their financial power because of trusting financial managers to candle their business finance, and some in the process, have lost their wealth as well.
However, managers, who are financially savvy, have the ability to handle the finance of their business, thereby, retaining their financial power. This protects your business from being a victim of such crime, and prevents anyone from taking advantage of you and your business.
3. Makes you Smart and Informed
Anyone who is financially savvy is always smart, this is because, such a person takes his time to learn the basics of managing money, thereby, making him smart and conscious of every decision he makes as regards money.
In addition, being financially savvy would help you understand your risk tolerance and what you are investing your money in, and if your investments are not aligned with your values, it will cause conflict within yourself.
4. Helps you create a financial plan
Business owners who are financially savvy always work with a financial plan, this has a way of giving money a purpose. In addition, not only does it help you create a financial plan, it helps you monitor your progress against that plan each year, thereby, making you stay accountable for your goals.
5. Helps you save better
Business owners who are financially savvy enjoy the benefits that come with saving, because they are always conscious of how they spend money, which in turn drives them to save more.
In conclusion, the key to creating and sustaining wealth, even as a business owner, is good money management.
Undoubtedly, it is not how much money you make that dictates your wealth; it is your net worth that does. Making smart financial decisions will increase the value of your investment portfolio and your net worth.
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