Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government. This guide will unpack the question: what is finance?
Video Explanation of Finance
Watch this short video to quickly understand the main concepts covered in this guide. It’ll explain the definition of finance, provide examples of finance, and cover some of the common topics on finance.
Examples
The easiest way to define finance is by providing examples of the activities it includes. There are many different career paths and jobs that perform a wide range of finance activities. Below is a list of the most common examples:
- Investing personal money in stocks, bonds, or guaranteed investment certificates (GICs)
- Borrowing money from institutional investors by issuing bonds on behalf of a public company
- Lending money to people by providing them a mortgage to buy a house with
- Using Excel spreadsheets to build a budget and financial model for a corporation
- Saving personal money in a high-interest savings account
- Developing a forecast for government spending and revenue collection
Finance Topics
There is a wide range of topics that people in the financial industry are concerned with. Below is a list of some of the most common topics you should expect to encounter in the industry.
Finance Careers
A definition of finance would not be complete without exploring the career options associated with the industry. Below are some of the most popular career paths:
Additional Finance Resources
To continue developing and preparing for a career in the field, these additional CFI materials will be helpful:
More Questions and Answers
CFI’s mission is to help anyone become a world-class financial analyst and has a wide range of resources to help you along the way. In order to become a great financial analyst, below are some additional questions and answersfor you to explore further:
FAQs
Finance is a broad term that describes activities associated with banking, leverage or debt, credit, capital markets, money, and investments. Essentially, finance represents money management and the process of acquiring needed funds.
What is financing in simple terms? ›
Financing is the process of providing funds for business activities, making purchases, or investing. Financial institutions, such as banks, are in the business of providing capital to businesses, consumers, and investors to help them achieve their goals.
What is an example of finance? ›
Examples of Finance
This includes buying and selling, taking out a loan, maintaining accounts, investing, moving money from one account to another, refinancing and asset, going public with an IPO offering, levying taxes, forgiving student debt, selling shares, repaying debt, creating budgets and forecasting budgets.
What is finance in accounting? ›
Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.
What are the two meanings of finance? ›
: to furnish with necessary funds. finance a son through college. 2. : to sell something to on credit.
What is the difference between money and finance? ›
Money is a part of finance. Finance is a broader concept that includes the management, creation, and study of money. The money includes cash and cash equivalents that are readily available for use. Finance includes personal, public, and corporate finance.
Does financing mean you own? ›
Just to be clear, you don't actually own a car when you finance. The bank (or whoever else lent you the money) owns the car. They just let you drive it around—as long as you make your monthly payment, that is.
Does financing mean payments? ›
When you finance a car, you make a down payment and then take out an auto loan that allows you to pay off the vehicle over a set period of time. You'll make monthly payments, with interest. You'll want to keep a few factors in mind, including the loan term, any fees, and the monthly payment amount.
What is finance in one sentence? ›
Finance is a term for matters regarding the management, creation, and study of money and investments.
What is the purpose of the finance? ›
The purpose of finance is to help people save, manage, and raise money. Finance needs to have its purpose enunciated and accepted. Students in finance should learn it in their business education. Perhaps the purpose should be taught even earlier at the elementary education level.
finance something He took a job to finance his stay in Germany. The building project will be financed by the government. be financed through something The research is financed through government grants. be financed with something Today just 10% of car purchases are financed with loans.
Why is it called finance? ›
Finance is essentially an umbrella term for housing several aspects of money, it can be broadly stated as the study of the matter regarding creation, management, and study of currency, money, and capital assets.
What is finance vs accounting? ›
The difference between finance and accounting is that accounting focuses on the day-to-day flow of money in and out of a company or institution, whereas finance is a broader term for the management of assets and liabilities and the planning of future growth.
Why finance vs accounting? ›
An accounting degree student will utilize professional principals and processes to manage numbers rather than influence them. On the other hand, a finance degree student will be more interested in financial strategy and control, and how they can wisely invest based on financial trends.
What is the definition of finance quizlet? ›
Finance. Defined as the science and art of managing money. At the personal level, finance is concerned with individuals' decisions about how much of their earnings they spend, how much they save, and how they invest their savings.
What is the difference between finance and accounting? ›
The difference between finance and accounting is that accounting focuses on the day-to-day flow of money in and out of a company or institution, whereas finance is a broader term for the management of assets and liabilities and the planning of future growth.
What is the function of the finance? ›
What is Finance Function? Finance functions are practices and activities focused on managing a business's financial resources to generate profits. They are critical in acquiring and managing financial resources and contributing to the productivity of other business functions, planning, and decision-making activities.
What is finance meaning importance? ›
Finance been called as the science of Money management. Observation or Understanding of the money management. 2. Control of Money: It studies the principles and the method of obtaining Control of Money.
