Estimated reading time: 3 mins
To many people, the world of finance is something that’s so complex it should be left well alone. From stocks and shares to profit and loss sheets, finance can seem fairly impenetrable to a newbie. And with many people struggling to see how it could be relevant to their own jobs, it’s no surprise that many people don’t have high levels of financial awareness or literacy.
But that shouldn’t be the case. Knowledge of finance is something that almost everyone, no matter what job they do, can benefit from. Not only can it help you out if you ever decide to enter the finance industry in some capacity, it can help you do everything from to understand how budgets work to improve your commercial awareness. And with a knowledge of even able to help you understand how to better improve your own remuneration package, it really is a win-win position to be in. This article will explore the role of financial knowledge in lots of different workplace contexts – and why it’s such a useful skill to have on side.
The finance industry
The first way in which having a strong knowledge of finance could be useful in the workplace is, of course, if you plan to enter the finance industry yourself. It’s one of the most highly paid sectors in the US, but that comes with a price tag – and that price is often knowledge of the obscure and sometimes complex financial system.
And remember, you may one day enter the finance industry in a non-finance role. The financial sector in the US is worth over 7% of the country’s GDP, after all, so it’s not unlikely that you’ll engage with it during your working life. You could work in marketing for a hedge fund, say, or in administration at a bank. While financial knowledge may not be a requirement for jobs like those, it is certainly something that can help you stand out from the crowd while applying for work. You could increase your knowledge by choosing a or go for a primer book which explains the inner workings of the industry. However you choose to learn there are plenty of resources available to aid your study.
But even if you never work in the finance industry, there are a whole host of other reasons why you might find yourself needing financial skills. One of them is budget management. Say you work in a public school as a principal, and you’ve received your funding for the year. You’ll need basic finance skills to work out how much budget you actually have to begin with: You’ll need to be able to go through the accounts to see what areas of spending are restricted, for example. If financial terminology baffles you, you may find yourself in situations where you’re unable to properly manage budgets – and that, in the long term, could lead to you being excluded from promotions to senior management in your industry.
If you work in the private sector at any level, you’ll need to have some element of commercial awareness. Whether you’re a self-employed decorator considering whether or not a certain type of paint is too expensive or you’re a corporate leader negotiating a price for an international contract, understanding the concepts of profit and loss and how they apply to your situation is essential.
Your own position
But perhaps the most important way in which some financial awareness goes a long way is in your own personal job offer negotiations. Say you’re offered a new job, and a pension scheme is available as part of the package. Without understanding how pensions work on a basic level and what the differences between the major types (such as defined contribution or defined benefit) are, you’ll struggle to make a sound financial decision. And even once your paycheck arrives, financial knowledge can help you to it appropriately as well – which is a great investment in your future both as a professional and as an individual.
There are plenty of reasons then why it’s a smart move to increase your financial knowledge before moving into a new job. Whether you need to demonstrate that you’ve got the ability required to manage budgets effectively or you simply want to make sure you can negotiate a good package for yourself with a new employer.