What is finance?
Finance is a commonly used corporate term that talks about capital and funds. It can be used for a person as well, but mostly it is used by companies and the corporate sector to define their funds and their savings.
It also talks about the allocation of assets and even liabilities apart from the funds that can be used to better the company. Finance talks about managing these funds and finding ways to multiply them, which reduces interests and increases the savings.
There are three types of finances currently present and being practiced. Personal finance, corporate finance, and public finance. Read below to have a better idea about the three.
Types of finances:
- Personal finance
As the name suggests, personal finance talks about the management of an individual’s funds and finances to help him by saving money and finding other various ways to invest. When talking about personal finance, a person can invest in different areas like real estate, cars, educations, insurances like medical, and even saving management.
Personal finance also includes protection against various unseen events that a person might face, managing taxes, preparing for retirement, and paying off a loan or debt.
- Corporate finance
The next is corporate finance. Corporate finance talks only about its different expenses and how the funds can be saved and channelized. They can be observed, and the useless spending of the funds can be stopped.
Corporate funding also deals with capital budgeting, defining the funding source in terms of debts, creditors, shareholders funds, or equity. It also concerns identifying the areas where there is a useless investment of funds or unrequired distribution, which can be stopped and can help save a lot of money.
It also involves acquisition in terms of stocks or assets. It also helps in risk management and identifying appropriate objectives for the betterment of the company.
- Public finance
Public finance talks about finances mainly related to the government. It is all about handling finances related to the provinces, various states that are running. Public finance talks about investments that are long term and need to be taken care of regarding the income and the taxes. Funds are obtained through taxes, insurance companies, or through banks by the government, and they later talk about the distribution, allocation of the said wealth.
Public finance also includes identifying revenue sources, identifying and applying the budgeting process, and even tax management.
