Definition of Money – What is Finance?

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Definition of Money – Finance

1. Efforts to raise funds to establish a new business or expand a business, for example by selling shares, bonds, or securities, or a composition between the three;

2. Knowledge of theory and practice regarding finance which includes money, credit, banking, securities, investments, foreign exchange, underwriting, brokerage, trusts, and so on;

3. fundraising by the government through tax collection or bond issuance, as well as revenue and expenditure administration

What is Finance? 

Finance is a term for things related to the management, creation, and study of money and investments. Finance can be broadly divided into three categories, public finance, corporate finance, and personal finance. There are many other specific categories, such as behavioral finance, that seek to identify cognitive reasons

Fundamentals of Finance 

Finance, as a distinct branch of theory and practice from economics, emerged in the 1940s and 1950,such as money, banking, loans, and investments, have existed since the dawn of human history in some form or another. 

Today, finance is usually broken down into three broad categories: Public finance includes the tax system, government spending, budget procedures, stabilization policies and instruments, debt issues, and other government issues. Corporate finance involves managing assets, liabilities, income, and debt for a business.

Personal finance defines all financial decisions and activities of an individual or household, including budgeting, insurance, mortgage planning, savings, and retirement planning.

Public Finance

Governments help prevent market failures by overseeing the allocation of resources, distribution of income, and stabilization of the economy. Regular funding for these programs is largely guaranteed through taxation. Borrowing from banks and insurance companies and getting dividends from their companies also helps finance the government.

Corporate Finance 

Businesses obtain financing through a variety of means, from equity investments to credit arrangements. A company can take out a loan from a bank or arrange a line of credit. Acquiring and managing debt properly can help a company grow and become more profitable.

Personal Finance 

Personal financial planning generally involves analyzing an individual or family’s current financial position, predicting short-term, and long-term needs, and executing a plan to meet those needs within the individual’s financial constraints. Personal finances are highly dependent on one’s income, necessities of life, and individual goals and desires. The most important aspects of personal finance include:

  • Assess current financial status: expected cash flow, current savings, etc
  • Buying insurance to protect against risk and ensure one’s material position is safe
  • Calculating and filing taxes
  • Savings and investment
  • Retirement planning

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