Finance is a broad term encompassing all matters concerning the science, development, and management of financial resources and securities. The study of finance also includes the practice of making financial decisions, such as selecting investments, saving and spending, and borrowings. Financial theory and concepts are further subdivided into many subtopics such as macro, micro, investment, money, banking, insurance, and business finances.
Finance also refers to the science of creating and managing wealth. Much like the other subjects in the science of economics, there is considerable debate as to what factors go into creating wealth. Differences on this topic include whether it is creating money, savings, or merely increasing the stock of assets. While some economists do not believe that the effects of finance are important to society, most economists believe that it does have a significant effect on the level of economic activity and prosperity.
The study of finance has produced some interesting findings on job prospects for graduates in finance. Individuals with degrees in finance and accounting tend to fare better when applying for jobs than those with related disciplines. Finance has become an increasingly popular degree with employers across the country, according to the Bureau of Labor Statistics. Online programs have been growing in popularity as well, which may account for the difference in job prospect for finance graduates with an online bachelor’s degrees versus those with traditional bachelor’s degrees in finance.
This main article covers the major areas of finance that affect the overall economy. The three major areas of finance that are the focus of this main article are personal finance, capital budgeting, and investment. As part of the analysis in this main article, the use of financial tools is also discussed including: debt, savings, loans, mortgages, and stocks. This overview is meant to provide a general understanding of the key issues of finance and to provide a basis for exploring the topics of personal finance, capital budgeting, and investment in order to assist young students with developing a solid foundation of financial knowledge.
Personal finance is one of the important areas of personal finance that falls under the area of the four main branches of finance. With the increasing complexity of today’s financial instruments and the ever-changing environments in which individuals operate, it is essential to have a solid understanding of personal finance. People who invest their money understand how their investments will fit with their long-term plans for living. In the area of investing, people consider investments in stocks, bonds, mutual funds, real estate, and other financial instruments. These investments can include things such as certificates of deposit (CD), mutual funds, money market accounts, certificates of purchase (COP), mortgage backed securities (MBS), and treasury bills.
Capital budgeting, also known as personal finance budgeting, is the process of evaluating the amount of capital that can be financed using current assets and current liabilities. This evaluation is performed by considering the need for current resources, expected future inflow and outflow, the possibility of revenue loss, risk-to-income ratio, viability of investment strategy, and other factors. Allocating the funds of the financial portfolios is also done depending on the financial objectives. Once this is done, a financial plan is then formulated. The process of formulating the plan is known as financial mathematics or financial economics.
In addition to budgeting and financial management, there is also the field of accounting. The purpose of accounting is to provide information on the financial transactions that have been made. Accounting gives reports on cash flow, income, and balance sheet performance. The accounting profession includes a number of specialties, including public accountants, financial analysts, tax accountants, managers of internal control, and financial managers.
The world of finance is complicated. Therefore, a degree in accounting is needed if you want to understand all aspects of the world of finance and its complex processes. Whether you are planning to become an investment analyst, financial manager, or an accountant in a corporation, an accounting degree is a must.