What is Finance? Definition, Overview.
"Rich people have small TV's & big libraries, and poor people have small libraries and big TV's." - Zig Ziglar
Finance has a very old rule: Budgeting, Spending & Saving.
To make this work one needs to understand financial planning which provides direction to your goals & dreams. It helps to make you understand your goals/dreams better in terms of why you need to achieve these goals or dreams. If you are an entrepreneur, an employee or a businessman you should know about finance. Finance plays a huge role in your business or life in many aspects it helps to increase your company value, changes your lifestyle, and many other things too.
So let's just understand the basics of finance :
🡆What is FINANCE?
Finance is the management of money which also includes activities like investing, saving, budgeting, borrowing, funding & etc. In simple words, it manages money or provides funding to a person or an enterprise from government or large companies.🡆There are 3 types of finances :
1) Personal Finance
2) Corporate Finance
3) Public/Government Finance
1) Personal Finance :
Personal finance is the process of managing and planning the finance or funds of an individual and helping them achieve their desire goals or dreams. This type of finance includes activities like investing, saving, income generation, budgeting or etc. Personal finance includes activities like an investment in studying, medical insurance, other insurance, real estate, and others. The main areas of personal finance are :
1) Earning
2) Investing
3) Saving
4) Insurance
5)Spending/Budgeting
2) Corporate Finance :
Corporate finance is the division of finance which deals with
funding the company expensive and building capital for the company. The purpose of corporate finance is to maximize the value of the company and it also helps to maximize shareholder value through long or short term planning by implementing various types of strategy.
Many entrepreneurs are starting new companies or startups in which they need financial help, so they usually receive capital from a venture capitalist or angel investors in exchange of interest/ownership (in some percent).
When companies/enterprises go public, they will issue their shares in the stock market by initial public offering (IPO) which is also included in corporate finance to raise cash/capital for the company.
3) Public/Government Finance :
This type of finance deals with the state, municipalities, manages the country's revenue, expenditures, and others.
Public finance has component include like collecting Tax, Expenditure,
Budgets, National Debt, Deflect/surplus.
All this collection, budgets are to support society and improving financial strategies.
Public/Government finance focuses on collecting tax revenues from the public, corporate companies, types of other tax for national expensive and other expenses like making a road, government hospitals, government salary and etc.
🡆What is Finance Management and Finance Planning?
These two terms are different terms most people think they are the same but they are not!
1) FINANCE MANAGEMENT is managing money or fund which is the necessity of any Business or organization. Sources of money are always limited either it is from government or large companies. This is a process of planning, budgeting, saving, spending or etc.
So it becomes very important for businesses/organizations to manage the funds or money properly.
2) FINANCE PLANNING is planning which helps you in your future to achieve your dreams/goals. Every organizer, business or person has their financial goals so this process helps to achieve their goals.
For financial planning, one doesn't need money at the time while planning this can be based on their goals which can be of short or long term.
🡆Best Source for financial Information/News :
1) CNN Markets
2) The Street.
There are many another website/app you can preferer for financial Information & News
So this is the basics of finance or just an overview, the finance industry is way bigger than you think. It has many strategies that can maximize one's life or business. So having knowledge of finance is a must. I will make another blog on topics like types of finance and finance management/planning in brief. In which you will be able to understand different types of finance and how to plan and manage money to maximize your growth and your business growth.
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