Loan is the act of lending, a grant of temporary use of something. It is often associated with financial related as a type of debt, a financial assistance between the lender and borrower.
There is a agreement between the lender and borrower, usually money loaned out with interest charge attached. Banks and Loan-sharks charge interests but what differentiates them is that the former is legal whereas the latter is illegal.
People often seek temporary loans to meet needs before pay-days without interest as it is between trusted friends and family. This is a simple transaction that seems harmless, but should it become a habit, it will reflect a worrisome trend, poor money management which is what majority of the people have.
Using this month’s income to pay for last months bills and expenses billed to them inclusive of their daily general expenses such as food and transportation expenses. The banks being the smart business owners, than introduce credit cards to allow majority of people to by pass this problem of not having sufficient money to spend.
While this credit card solves a temporary solution to the problem, it in fact creates a much bigger problem that is snowballing up in damage and image if not managed wisely.
That problem in particular is the interest incurred during the use of credit cards for overdue loans which has since converted into debts adding to the woes of employees who are the majority without sufficient money cash-flow also known as cash liquidity in accounting terms.
Loan is a double-edge sword, when used correctly, it will help individuals, businesses increase their wealth, cash-flow liquidity, and thus more money earned. But if used wrongly, it will speed up the problems and have it erupted like a volcano with magma flowing up from the source… Magma in this case refers to the snowballing debts compiled and made worse by interests.
The start of the volcano in the making is the lack of proper financial knowledge. What caused the magma to shoot up is the temptation of shopping, advertisements and the urge to keep up with trend and be sociable thus money is spent.
To learn proper financial management skills, it starts from young and in fact, there is no need for professional financial management, all of it boils down to proper understanding and the contribution of experience for people across the globe.
Learning professional financial knowledge management is a skill for use and application in big companies with deep pocket, thus it is like a crash course to educate and impart a complete rookie who knows nothing about financial management to somebody who knows all the crucial and critical pointers as advised by lecturers and professors during the learning.
Either way, the most important route to success is to start off with the proper basics of sound financial management skills.
Are you in a having nasty problems with your money? Simply do a simple chart which calculates your input and output of how your money are spent and you will get a better understanding of where you money is wasted on before coming up with your own plan to better managed your own money.
Money management is important but do not forget it is a double edge sword. Handle with care.
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