What Is Finance?
Finance is the management of money, assets such as investments and credits, liabilities such as debts and leverage, and also the analysis of banking systems and capital markets management. Besides, finance involves money creation, oversight, and also the determination of the most efficient ways of acquiring the ever sought funds to run the various components of the financial system.
Ideally, financial concepts have their foundations on three main commercial fields, namely personal finance, public finance, and corporate finance. Most fundamental financial concepts originate from macro and microeconomics theories, and one of the most fundamental concepts in money management is the time value of money. The theory states that the value of a dollar today is worth more than a dollar in the future.
What is Personal Finance?
It is a financial planning concept that involves scrutinizing an individual current financial position to help in developing future financial strategies and needs and within their financial plan and constraints. Personal finance may include acquiring financial products such as assurance, mortgages, credit cards, and investments, among others.
Similarly, banking services such as savings, mobile payment services such as PayPal are categorized as personal finances. Unlike public finance that involves the entire nation’s finance systems, personal finance focuses on individual financial activities and situations.
It is worth noting that different financial strategies will significantly depend on the different levels of income, living standard expectations, financial desires, and goals. For instance, an individual is required to either save or invest for retirement benefits. Keeping for retirement benefits is a form of long term investment under personal finance management.
What Is Public Finance?
Public or government finance involves dealing with financial items such as national budgeting, tax regulations, federal spending, and debt and bond issuance laws since they affect how the government makes its payment for the services it derives from the public.
Corporate finance is a department within the corporation set to oversee the financial activities of corporate bodies such as large companies. For instance, a company may be willing to acquire new assets through the issuance of its bonds or even offering stock.
