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 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?
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 finance in short description? ›
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 is the important definition 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 finance best defined as? ›
Finance is the study and discipline of money, currency and capital assets. It is related to but distinct from economics, which is the study of the production, distribution, and consumption of goods and services.
What does actually mean in finance? ›
actual is the process of comparing your organization's predicted budget to the amount you actually have, in order to find the variance, or difference. Your business' static budget is the predicted number you're expected to reach based on historical income and expenses.
What does finance simply mean? ›
Finance is a study which figures out how people, businesses and groups make and use money. It can mean: Thinking about money. Thinking about how to control money to make profit. Studying how to take chances in projects that make money.
How do you explain finance to a child? ›
How to Teach Preschoolers and Kindergartners About Money
- Use a clear jar for their savings. ...
- Set an example with your own money habits. ...
- Show them stuff costs money. ...
- Show them how opportunity cost works. ...
- Give commissions, not allowances. ...
- Avoid impulse buys. ...
- Stress the importance of giving. ...
- Teach them contentment.
The word finance also emerged in the 15th century but from Anglo-French finer, meaning "to end" as well as "to pay," and similarly in English referred to an end or payment. In the 18th century, the word came to refer to pecuniary resources and the management of funds.
What does financial mean simple? ›
Financial means relating to or involving money. The company is in financial difficulties. Synonyms: economic, business, money, budgeting More Synonyms of financial.
Term Finance : Features
Non-fund based finance in the form of deferred payment guarantee for the acquisition of fixed assets towards starting/expanding a business or industrial unit.
What does its mean in finance? ›
Sometimes we use the word “Its” instead of “title.” It is intended to designate what position the signer holds at the company, in order to give evidence that this person is authorized to sign on behalf of the company.
How do you define finance? ›
Finance, of financing, is the process of raising funds or capital for any kind of expenditure. It is the process of channeling various funds in the form of credit, loans, or invested capital to those economic entities that most need them or can put them to the most productive use.
What does financing mean? ›
Legal Definition
financing. noun. fi·nanc·ing. : the act or process or an instance of raising or providing funds. also : the funds thus raised or provided.
How can finance be best defined? ›
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 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.
