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 – money used to fund a business or high value purchase. Financial year – a 12-month period typically from 1 July to 30 June. Financial statement – a summary of a business's financial position for a given period. Financial statements can include a profit and loss, balance sheet and cash flow statement.
What is the best definition of financing? ›
What Is Financing? 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's the best definition of financial? ›
Financial means relating to or involving money. The company is in financial difficulties. Synonyms: economic, business, money, budgeting More Synonyms of financial.
What is the best explanation of 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 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.
How do you explain finance? ›
What is Finance? Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting.
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 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 is a simple finance? ›
A simple sentence, according to the Cambridge Dictionary, is “a sentence that has only one verb.” The Collins Dictionary defines a simple sentence as “a sentence consisting of a single main clause.” A simple sentence is defined as “a sentence consisting of one independent clause only.
Term loans are immediate, up front financing sources for local and small businesses that extend over a long time. These loans are long-term debts raised by companies that come with a schedule for payments and interests paid in installments at fixed or floating rates.
What is the original meaning of finance? ›
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 is financial in one word? ›
Financial, fiscal, monetary, pecuniary refer to matters concerned with money. Financial usually refers to money matters or transactions of some size or importance: a financial wizard.
What are the two meanings of finance? ›
fi·nance. 1. plural : money or other liquid resources of a government, business, group, or individual. 2. : the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities.
What is meant by financing? ›
Financing means asking any financial institution (bank, credit union, finance company) or another person to lend you money that you promise to repay at some point in the future. In other words, when you buy a car, if you do not have all the cash for it, the dealer will look for a bank that will finance it for you.
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 financial mean easy? ›
Financial means relating to or involving money. The company is in financial difficulties. ... the government's financial advisers. Synonyms: economic, business, money, budgeting More Synonyms of financial.
How to understand finance? ›
Listening to podcasts and reading books about specific areas of finance that interest you help break down more complex financial topics and speed up the learning process. There are also many paid and free courses out there that offer courses in different areas of finance and investing.
