The term “finance” encompasses many meanings and applications, which is why people tend to get confused and even panicked when they are told about this concept.
Part of that fear is evidently due to the lack of information, and to help you solve that problem in this article we will thoroughly explain everything about finance.
When you are thinking about applying for a personal loan it is very useful to know about finances so that your experience is always positive.
What are finances?
Finance is an area of the economy that focuses on studying the set of activities related to money and its administration.
The concept of finance that appears in dictionaries can be somewhat vague and inconclusive. But we interpret that finance is related to all capital transactions between individuals and / or companies.
The term can also refer to the administration of money, since this action is a fundamental part of the management of finances in all types of activities.
Field of action of finance
Finance is a part of the economy that should always be applied in fields such as investments, transactions between institutions or financial markets, and in the administration of business and home accounting.
Given that its function is closely related to money, the scope of finance is really wide. Using it successfully you can manage the purchase of assets without problems, and you will know what to do with the surplus of money.
You can also browse the financial products market better and choose the credit instantly that best suits your needs. In case you have your own company, you will know how to successfully manage all assets and assets to get the most out of them.
If you don’t understand finance, then a credit comparator will be an ideal ally that will help you find the best, and safest, offer for you.
Types of Finance
Because its scope is so wide, it is not surprising that there are several types of finances. Next we will talk a little about each of them.
They are all transactions that are made at the level of banking entities or stock investments. They are related to currency exchange rates, and other markets in the international economy.
It is related to the personal management that we give money to cover our basic needs. One of the tools of this type of finance is personal budgeting.
It may be related to personal finances, but they are not an extension. In family finances all economic actions (investments, loans, savings) are used for the whole.
This type of finance is taken the same as that of an SME; that is to say, in order to be effective, you have to manage income well and establish planning and distribution that positively affects each family member.
It is the one used by governments and its main objective is to distribute the wealth of the state well, achieve macroeconomic stability and develop strategies to encourage the national economy.
This type of financing focuses on 3 objectives: to incentivize investments, properly manage financing, and make management decisions that help the company’s growth.
Relationship of finances with other disciplines
One of the reasons why it is important to learn about finance is that this practice is present in many other activities and is related to other sciences.
The relationship between finance and the economy, administration or accounting is obvious, but did you know that it is also related to marketing? Yes, this relationship is established through the 4 P: product, price, place or point of sale and promotion.
In addition, there is a close relationship between finance and computer science, especially now that every aspect of life is being digitized.
Finally, it is worth mentioning the relationship it has with mathematics. The work of these two united practices is responsible for evaluating the behavior of money within a certain period of time.