Financial management refers to the planning, organizing, directing, and controlling of finances in an organization. The US labor department says financial managers create reports, direct activities, and develop plans to meet long-term organizational goals.
Invest in your future and learn the ins and outs of financial management below if you are confident this is the path you want to follow.
What Is Financial Management?
Financial management is the organizing, planning, and controlling of financial activities to achieve company objectives. This practice is vital in any organization that manages the procurement of funds, accounting, and financial risk assessment.
These companies have control measures in place which involve financial processes, policies, and procedures. The role of a company’s finance department is so important that it often collaborates with human resources, a department with the most significant expense.
What Is Financial Management Used for?
Financial management is crucial for an organization to run efficiently. It has to provide quality and regular services.
Companies that do not have superb financial management will face difficult obstacles throughout their development journey, especially small businesses.
A company’s financial management department can be used for a variety of tasks including:
- Forecasting a company’s revenues, expenses, and net profit;
- Reducing the cost of finance;
- Ensuring sufficient funds in a company;
- Assisting in making investment decisions with accurate financial reporting;
- Making dividend decisions for shareholders and retained profits;
- Filing and paying taxes.
Types of Financial Management
There are four key financial management decisions covering acquisition, financing, and the management of assets.
The modern approach to financial management has companies answering four different financial decisions: capital structure decisions, capital budgeting, dividend decisions, and working capital management decisions. Explore these below.
Capital Structure Decision
Capital structure refers to reaching long-term investment needs. A finance manager decides the where, when, and how of funds to raise.
Capital Budgeting refers to planning a firm’s long-term investments. The finance manager here decides and evaluates the size, timing, and risk of future inflow and outflow of cash. Know that capital markets are where long term trading of securities happen, while a money market is where short-term trading of securities happens.
A financial manager decides whether to distribute dividends and then how much to distribute. They will also decide on how much after-tax money will need to be saved for future investments and shareholders.
Capital management is related to the short term of assets or inventory. This means bills that need to be paid or profit recently gained. Financial website Advisory HQ defines capital management as a strategy to ensure maximum efficiency in a company’s cash flow. It says the strategy aims for the business to have adequate means to meet everyday expenses.
Learning Financial Management
A bachelor’s degree in finance, accounting, economics, or business administration is needed to become a financial manager, which can take years to obtain. Additionally, some companies prefer a candidate with a master’s degree in business administration, finance, or economics.
How Long Does It Take to Learn Financial Management?
The decision you make about which route to take will determine how long it will take for you to learn financial management. If you choose only to earn a bachelor’s degree, it will take four years after high school to complete. Remember to chart a course to earn one in accounting, finance, economics, or business administration.
Complete a master’s degree program with an additional four years in finance, business administration, or economics should you decide to continue. Remember that earning a master’s degree will improve your chance of landing a high-paying position at a reputable financial firm or becoming a go-to financial advisor.
Also consider that on top of obtaining a degree, some financial managers have an average of five years of business experience as a loan officer, auditor, financial analyst, or accountant.
Five years on top of completing your bachelor’s and master’s degree is now 11 years. The reason it takes so long to learn financial management is its importance in keeping a business operating efficiently. Successful financial managers must have a strong understanding of departments in an organization.
How to Learn Financial Management: Step-by-Step
Below we have a step-by-step list of how to learn financial management. The sooner you decide your career path, the better. If you know financial management is the career for you, begin these steps as soon as you receive your high school diploma or GED.
- Earn a bachelor’s degree. Attending a university or college is the first step to learning financial management. Take as many learning opportunities as you complete your degree. Participating in organizations and completing internship programs are a great way of this.
- Pursue a master’s degree. This step is optional, consider how far you would like to take your education. Completing a master’s degree is an excellent choice if you want to gain an advantage over your peers. A master’s degree allows you to quickly specialize in a particular financial management subfield as there will be more opportunities offered after graduation.
- Gain experience. Take advantage of any opportunity that comes your way. Part-time jobs and internships are a great way of earning experience as you study. Be sure to highlight these experiences in your resume while looking for a job. The more experiences you have in finance, the better you will perform as a financial manager.
The Best Financial Management Courses and Training
Financial management courses and training programs are generally offered in-person but since the COVID-19 pandemic, many are migrating online. Regardless, in-person courses are an excellent way to get hands-on experience from expert instructors.
There are also distance learning options that are seemingly popular right now. Some even allow you to learn at your own pace. Find a few options below.
Best In-Person Financial Management Classes
Take advantage of in-person financial classes near you, if you’re lucky enough to have them available. In-person courses are a fantastic opportunity to get hands-on experience in a traditional classroom setting.
- Provider: Coursehorse
- Time: January 26, 2021–March 30, 2021 (10 sessions)
- Prerequisites: Beginner
- Price: $665
This class teaches students how to make better investment decisions. How to read the financial pages and the risk and reward of investing are also covered.
The link provided above is specifically for New York City, but use the drop-down menu to see if this course is offered near you.
Best Online Financial Management Courses
Online classes are one of the best options for learning financial management as they can be attended from anywhere in the world. Know that online courses are not much different than in-person ones. Online courses may have self-guided options but they still have assignment deadlines. Explore a few online financial management courses below.
- Provider: Harvard Business School Online
- Time: 16 hours
- Prerequisites: None
- Price: $1,600
The Harvard Business School Online offers financial accounting online courses. Learn how a balance sheet, income statement, and cash flow interact with each other and how they are developed.
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V.G. Narayanan, a Thomas D. Casserly Jr. Professor of Business Administration at Harvard Business School, teaches you to “unlock critical insights into business performance and potential”. The course also covers key accounting and financial concepts and principles.
- Provider: Coursera offered by the University of Illinois
- Time: 8 months
- Prerequisites: A background in statistical concepts
- Price: Varies
The University of Illinois teaches strategic financial management that includes courses in accounting, investments, and corporate finance. Coursera offers it as a “specialization”, which means there are a total of seven courses. The classes also fill a requirement as a portion of the University of Illinois, so it’s possible to receive college credits.
Best Free Financial Management Courses
Another great way to dive into the world of financial management is by enrolling in a free class. Attending a free class allows you to gauge how interested you are in the topic. Not to mention you will be saving money, which is a great start to learning budgeting.
While free and education are two words that hardly ever go together, below are two totally free financial management classes.
- Provider: Learn@Forbes
- Time: 8 courses/ 16 hours
- Price: 14 day free trial
Finance Essentials is offered through Learn@Forbes. Gain an understanding of how money works through this eight-course specialization program. The courses provide training that will allow you to “compete at the highest level of finance”. Access the specialization with a 14-day free trial.
- Provider: Alison
- Time: 6–10 hours
- Prerequisites: Level one
- Price: Free
If you just want to learn how to create a better budget and effectively manage your money, enroll in Alison’s free financial literacy course. The six to 10-hour class teaches the techniques to manage your money better.
Best Financial Management Books
Financial management is hardly new, so there are a variety of resourceful books available on the subject. Explore a few of those below.
‘The Millionaire Next Door: The Surprising Secrets of America’s Wealthy’, Thomas J. Stanley
What makes a millionaire? The Millionaire Next Door explores this concept by identifying seven key traits consistent across those who have acquired wealth.
‘The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel’, Benjamin Graham
The Intelligent Investor offers “timeless wisdom” from the most significant investment advisor of the 20th century, Benjamin Graham. In this revised edition, financial journalist Jason Zweig gives his two cents on today’s market while still preserving Graham’s strategies. Learn how to incorporate Graham’s principles in a modern market.
The Guide to Financial Management is a guide for managers looking to understand the world of finances. The book explores financial jargon, financial statements, performance measures, management accounts, investment appraisal, and budgeting.
Financial Management Certifications
A certificate in financial management means that you are ranked among the highest standards in your field. Earning a certification in financial management is an excellent way to continue your education and stand out in the competitive market.
The Certified Financial Planner marks the standard of excellence for financial planners.
This postgraduate professional certification, offered by the United States-based CFA, is one of the highest levels of global legal and regulatory recognition and distinction.
The CMA is a professional accredited certification in both the financial management and management accounting fields. The certification covers and proves knowledge in financial planning, analysis, control, decision support, and professional ethics.
Online Financial Management Resources
There are an abundant amount of resources, whether you’re looking for something to help you better understand financial management or save money. Find a few of them below.
Intuit Mint helps you manage your money all in one place by offering account and bill services.
LinkedIn Premium members have access to the social networking site’s unlimited financial resources, including a library of lessons taught by expert instructors. If you’re not a LinkedIn Premium member, enjoy a month’s free trial.
Should You Study Financial Management?
The field of financial management is an exceptional one and studying the subject is personally and professionally beneficial. If you wish to pursue a career in financial management, there is no better time than now.
According to the Bureau of Labor Statistics, the employment of financial managers is expected to grow by 50 percent from 2019 until 2029. Skill sets for successful financial management professionals include problem-solving, analytical, technical, numerical abilities, self-motivation, and awareness.
Furthermore, if you are looking to study financial management for personal reasons, there is no better time to start planning for the future. Invest in yourself today by starting to learn the exciting subject of financial management.
About us: Career Karma is a platform designed to help job seekers find, research, and connect with job training programs to advance their careers. Learn about the CK publication.