How do you explain finance to nonfinance?
You could say that finance is the essence of any business. It’s what keeps the lights on, and the wheels turning. But for many people, finance is a foreign language. They might not understand all the jargon and technicalities, but that doesn’t mean they can’t benefit from learning more about it. This blog post will explore how to explain finance to nonfinance people. We’ll cover some of the basic concepts and terms so that everyone can be on the same page next time you’re having a conversation about finance.
1. Turn your financial explanation into a story.
One of the best ways to explain finance to nonfinance people is to tell a story. And not just any story, but a story that is relatable and easy to understand. For example, you could tell the story of a small business owner trying to decide to take out a loan to expand her business. By telling this story, you can help the listener understand the different financial options available and the pros and cons of each option.
Another great way to explain finance to nonfinance people is through examples. For instance, you could use an example of someone saving for retirement and explain how different investment options can impact their savings goals. Using examples, you can help listeners see how the concepts you’re discussing apply to real-world situations.
Ultimately, the goal is to make your financial explanation easy to follow and digestible for the average person. By breaking things down into simple terms and stories, you can help even those with no prior knowledge of finance gain a better understanding of the subject matter.
2. Speak the language or terms that resonates with your audience
When talking to someone about finance, they must use language they will understand. Avoiding jargon and using simple language will help ensure your message gets across clearly.
It’s also important to tailor your message to your audience. If you’re speaking to a group of non-financial professionals, you’ll need to explain things that makes sense to them. This means avoiding technical terms and instead focusing on the big picture.
For example, rather than “net present value” or “internal rate of return,” you might instead talk about how investing in a company can help it grow and make more money. This kind of language will resonate with your audience and make them understand what you’re trying to say.
3. Don’t be afraid to be concise.
When explaining finance to nonfinance people, it’s important to be clear and concise. Don’t be afraid to use simple terms and explanations. The goal is to communicate the concepts in a way everyone can understand.
Here are a few tips for being concise when explaining finance:
- Use simple language
- Avoid jargon
- Be clear and concise
- Use examples to illustrate your point
- Repeat key points throughout your explanation
4. Know your audience
Knowing your audience when discussing finance is important, as the terminology and concepts can be confusing to those without a financial background. When speaking to a nonfinance individual, it is important to use layman’s terms and avoid jargon. It is also beneficial to provide real-world examples that they can relate to. Doing so will enable you to effectively communicate your ideas and ensure that your audience understands the topic.
5. Be prepared to defend your numbers.
When presenting your company’s financials to non-financial staff, it’s important to be prepared to defend your numbers. You may be asked questions about the assumptions behind your forecasts, the drivers of your revenue and expenses, and the risks inherent in your business.
To help you prepare for these questions, here are some tips:
- Know your audience. Make sure you understand whom you’re presenting to and their financial understanding level. This will help you tailor your presentation accordingly.
- Be clear and concise. Use language that everyone can understand, and avoid technical jargon.
- Focus on the big picture. Highlight the key points that you want your audience to remember.
- Be prepared to answer questions. Anticipate the questions that you might be asking, and have answers ready.
- Practice, practice, practice! Rehearse your presentation until you’re confident that you can deliver it effectively.
6. Make the data directly accessible to users.
When it comes to financial data, making it directly accessible to users is essential. This data should be easy to find and understand without needing a finance degree. There are a few ways to make financial data more user-friendly. One way is to create clear and concise reports that explain the data in layman’s terms. Another way is to use visual aids, like graphs and charts, to help illustrate the data. Making financial data accessible to users is important because it helps them make informed decisions about their money. It also promotes transparency and builds trust between businesses and their customers.
7. Experiment with formats
There are ways to explain finance to nonfinance people. You can use charts, graphs, and tables to help explain financial concepts. You can also use case studies and real-world examples. You might want to experiment with different formats to see which one suits best for your audience. For example, you could create a video tutorial or an infographic. Or, you could write a blog post or article that breaks down financial concepts into simple terms.
Make sure your explanations are clear and concise in whatever format you choose. Avoid using jargon or terms that your audience won’t understand. And always remember to keep it interesting!
8. Offer only as much data as you think helps the organization
When explaining finance to nonfinance, offering only as much data as you think helps the organization is important. Too much information can be overwhelming and confusing, while too little information can leave out critical details. The key is to find a balance that provides enough detail to help the organization make informed decisions without being overwhelming.
One way to determine how much data to provide is to consider the audience. If the organization comprises non-financial experts, it may be helpful to provide more detailed explanations and examples. On the other hand, less data may be necessary if the organization consists of financial professionals. Ultimately, it is up to the individual presenting the information to gauge the appropriate detail level.
Another factor to consider when deciding how much data to offer is the purpose of the explanation. More data may be necessary if the goal is simply to educate or inform. However, less data may be needed if the goal is to make a specific recommendation or decision. Again, finding a balance that provides enough information without being overwhelming is important.
Ultimately, offering only as much data as you think helps the organization is critical for providing a clear and concise explanation. Too much information can be confusing and inefficient, while too little information can leave out critical details. Finding a balance that provides enough detail without being overwhelming is essential for delivering a successful explanation of finance to nonfinance individuals within an organization.
9. Know your role
To explain finance to nonfinance, it is important to know your role within the organization. For example, if you are a financial analyst, your role is to provide analysis and recommendations to management to make informed decisions about the organization’s financial health. If you are an accountant, your role is to maintain records of the organization’s financial transactions and prepare financial statements. However, regardless of your role within the organization, it is important to communicate effectively with nonfinance to help them understand the organization’s financial situation.