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 finance easily explained? ›
What Is Finance? Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows.
What best describes finance? ›
Finance is concerned with the art and science of managing money. The finance discipline considers how business firms raise, spend, and invest money and how individuals divide their limited financial resources to achieve personal and family goals.
What is my finances definition? ›
When you're talking about finances, you're talking about money and things that are worth money: assets, stocks, funds, resources, etc. Finances is a fancy word for financial matters — in other words, things having to do with money.
What is finance in one word? ›
/ˈfaɪnæns/ To finance something is to pay for it, like using the money you earn at your part-time job to finance your cell phone bill. As a verb, it carries two very different meanings: "to pay for" or "obtain on credit." So, if you can finance your trip, it means you have the money to pay for it.
What is the legal definition of finance? ›
finance n. 1. pl. : money or other liquid resources of a government, business, group, or individual. 2 : the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities.
Why finance best answers? ›
I'm drawn to finance because it provides a comprehensive understanding of an organization's financial health, risk management, and investment decisions. By pursuing a career in finance, I can strengthen my ability to analyze financial data, provide strategic insights, and guide organizations towards sustainable growth.
How to explain finance to a child? ›
When they're little
- Introduce the value of money.
- Emphasize saving.
- Introduce them to investing.
- Encourage a summer job.
- Introduce them to credit.
- Consider a Roth IRA.
- Help them set a budget.
- Encourage them to stay invested.
Here's an example of how to highlight your educational background in your answer:"I chose to study finance because I realized I was passionate about investing and excellent at investment strategies. I took capital markets, financial accounting, corporate finance, financial modelling, and portfolio management courses.
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.
Net assets (also known as net worth, owner's equity or shareholder's equity) – the total assets minus total liabilities. Net income – the total money earned by a business after tax and other deductions. Net profit (also known as your bottom line) – the total gross profit minus all business expenses.
What is the meaning of finance function? ›
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 the sentence of finance? ›
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 does financially mean definition? ›
fi·nan·cial·ly fə-ˈnan(t)-sh(ə-)lē fī- : with respect to money : from a financial point of view. The company struggled financially for many years.
What is the definition of finance quizlet? ›
Finance definition. -"... the science or study of the management of money" -The science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities."
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 do finance people do? ›
A person in the finance field focuses on stocks and bonds and determines good investment strategies to ensure that their finances grow with the everchanging market.
What is the difference between finance and accounting? ›
What is the Difference Between Finance and Accounting? Accounting is a narrower field that focuses on professional processes to manage numbers and accounts, while finance uses the same information to analyze potential growth patterns in order to strategize company finances.
