Finance is a broad term used to refer to activities that deal with funds and their management. Finance can be specific to a currency (e.g. dollar, euro, yen, etc.) or not. Finance has also been dubbed as the “science of managing funds.”
There three branches of finance, described below. While there are details specific to each branch of finance, the basic concepts remain the same. These concepts include the core ideas of money, risk, and time. Finance also deals with how these core concepts are related to each other and how they are affected by external circumstances.
1. Business finance
Business finance mainly deals with how a business is funded and how these funds are utilized in order to bring in more funds. The activities of the business are taken into account as well as the risks involved in the undertakings. At the end of the day, the business’ profitability is the goal.
2. Personal finance
Personal finance mainly deals with the money matters of an individual and his/her family. The end goal for personal finance is to be able to handle monetary resources so much so that the individual or family has enough to meet their needs, make more money for extra activities (investing perhaps), and save for retirement.
3. Public finance
Public finance mainly deals with the resources of governments. In this realm of finance, the main players are the Central Banks of the countries, as well as other institutions that can influence the financial matters of the nations.