Why Everyone Should Learn Finance, No Matter Their Experience Level
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Financial analysis can be daunting: even if your background is in finance, working through complex financial statements can be intimidating. Maybe you chose a more qualitative career due to a bad experience with a math teacher, swearing off numbers and analysis for the rest of time. Or, maybe you’re the one in five people in the United Kingdom suffering from what researchers have titled “financial phobia,” according to a report from 2003. These people feel frozen, ill, and sometimes dizzy from the prospect of handling money.
Continuing to avoid a working understanding of finance or hesitating to refresh your knowledge can hold you back in your career. If you aren’t at least conversant with the financial jargon, you are limited in your ability to create success for your company and for yourself. If you’re looking to move up in your organization, you need to know where your company has been and where it may need to go. Richard Ruback, professor at the Harvard Business School, advises that one should make financial skills a “survival issue”: how do your day-to-day actions contribute to your company’s growth? How can you help drive revenue or mitigate costs?
Psychology tells us the only true cure for a phobia is exposure. The first (and hardest) step in overcoming any fears about finance is facing it head on. The rest is all effort: accounting is not a monster under the bed out to get you. There’s no “magic,” just lingo. Beyond understanding what you’re looking at, all you need is basic math skills: adding, subtracting, and the occasional multiplication or division according to Joe Knight, partner and senior consultant at the Business Literacy Institute.
If you have your sights set on positions with greater authority and status, your financials need to advance as well. Acquiring a deeper understanding for the way money moves through your organization and the economy, being able to analyze and maintain a balance sheet, and quantitatively supporting growth strategies is imperative of senior leadership. As they say, it takes money to make money.
No matter how you see finance and economics, they are man-made at their core. They are reflections of history, some of the oldest disciplines humans have studied, and define almost all aspects of our lives. Studying finance transcends its quantitative roots as a study of human nature, motivation, and ingenuity. It offers insight into where we’ve been, and where we will go. Learn to speak the language of finance by enrolling in our Financial Analysis for Leaders program with the 2018 Distinguished Teaching Award recipient, Panos Patatoukas, and see where financial acumen can take you.
Written by: Corinne McGinley, Berkeley Executive Education Sales & Marketing Intern, UC Berkeley Undergraduate Student
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Knight, Rebecca. “How to Improve Your Finance Skills (Even If You Hate Numbers).” Harvard Business Review, 2 July 2017, hbr.org/2017/03/how-to-improve-your-finance-skills-even-if-you-hate-numbers.
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