Finance is a broad term encompassing various things regarding the study, development, management, and distribution of financial assets and liabilities. It also involves policies that secure the assets and liabilities of an enterprise and provide for their utilization. The study, development, management, and allocation of financial resources are central objectives of finance. All aspects of finance affect the society as a whole. While the basic purpose of finance is to secure the economic interests of society as a whole, it also has other dimensions such as redistributive taxation, investment, and debt financing.
Finance theory is the term used to describe the entire field of study that is concerned with the study of financial systems and the functioning of the financial system. It includes the economics of money, banking, financial markets, fiscal policy, and the role of government. The scope of finance theory is wide and includes the micro economic theories like those of Say, Pigou, and others. The modern conception of micro economic theories is often called micro foundations of modern finance. The scope of this theory is international and applies to the functioning of the financial systems of different countries and economies.
Personal finance is concerned with the money used to purchase goods and services and for other purposes such as education, buying a home, buying a vehicle, insurances, and retirement. Corporate finance is mainly concerned with long-term assets of a corporation such as stocks, mutual funds, bonds, and property. Public finance refers to the activities of government in the external world, including the finance budget, national economy, and currency policy. Public finance deals with the issues concerning the financing of government institutions, such as colleges, universities, hospitals, and other establishments of the public sector.
Broad terms used in the field of finance are: money, banking, economic money, fiscal money, credit, capital markets, asset quality, liabilities, and marketable securities. These are broad terms that cover the wide range of activities that finance. For instance, assets such as land, buildings, and equipment are included in the category of assets that finance. The process of banking involves creating loans, buying or selling securities, mortgaging securities, borrowing money, managing credit, making purchases and selling securities.
The difference between an accountant and a financial advisor largely depends on their knowledge of the various fields of finance. To better understand where an accountant stands in relation to a financial advisor, it is important to understand how accounting is different from financial accounting. A financial advisor will be mostly knowledgeable about banking, but not about other financial transactions. As a rule, accountants specialize in accounting while financial advisors mainly focus on business and investing.
While pursuing a finance career, you should be aware of three main points of interest. First, these involve taxes. Finance involves paying taxes so that the government can collect the revenue that it earmarks for the various expenditures and programs. Second, finance management involves budgeting and financial planning. Finally, you should have good interpersonal skills because dealing with both individuals and institutions is part of your job. These three main things are essential to a successful finance career.
