Introduction to Finance2 min read
Finance is a broad term encompassing things regarding investments, the financial management, development, and analysis of funds and securities. The discipline includes many approaches and views on how money is produced, where it is invested, who invest it, how it is utilized, and what the implications are of each. In simple terms, the study of finance seeks to give an account of how money is created, how it is used, how it is disposed, how much of it is held by individuals and governments, and what the implications are of discarding it. All of these things impact the world economy.
The history of finance can be traced back to the Ancient Greeks, who viewed it as a part of the physical sciences, with borrowing and lending acting as the tools of money management. For them, the role of banks and other financial institutions was to create money so that individuals and other groups could buy things that they needed to survive. Banking grew in importance and power during the Pax Romana, which lasted from the 7th to the 10th century.
With the development of banking systems throughout the centuries, finance grew into three main subcategories. One of these was called private or household finance. This included savings, loans, and investment for the benefit of the individual or family. Public finance dealt with the financing of governmental programs and activities, while central or municipal finance dealt with the financing of cities, counties, and national budgets.
The modern era of finance has changed significantly. Technological change and the growth of the global market have made huge changes in the methods and approach to managing money. Today, finance professionals identify themselves as business managers, financial analysts, financial planners, or wealth management consultants. Some work in the government, while others work in corporations and private firms. They seek to understand how individuals and groups use financial resources. They also conduct research and provide advice on how better to manage money, both for themselves and as well as for the public.
The concepts that govern the management of money are referred to as the three main concepts of financial systems. These include time value, price value, and net value. The concept of time value is used to measure the value of a good or service over time. Price value is associated with the cost of doing business. Net value is used to value the total income or return from an investment over time.
There are several subcategories within the three main subcategories of finance. Finance graduates may choose to specialize in one or more. Depending on the degree program they have chosen, they may find work as credit counselors, finance lawyers, financial managers, or financial analysts in any of the publicly held financial services sectors. Those with graduate degrees may find employment as chief executive officers or finance professors at colleges and universities, in finance companies, financial planning offices of insurance companies, or in various government agencies.