Finance is a broad term encompassing many things about the science, development, and management of funds and assets. In particular, it covers the issues of how individuals, companies or government agencies acquire the money necessary to perform their functions and/or maintain their balance sheet as well as how they invest or save that money. In simple terms, finance describes how someone makes money out of his or her investments. The term also covers the process by which someone keeps his or her money intact by ensuring that it grows in a healthy and secure manner over time.
There are many different aspects of finance, all of which contribute to the management of financial resources. Some of the most important aspects of finance are: planning, investment, management, taxes, and financial risk. Planning refers to the strategic management of the organization’s resources, including its capital structure, investment strategies, retained earnings, and liabilities. Investment strategy refers to the systematic approach utilized to make investments that will yield positive results; however, any potential losses are weighed against the positive aspects of such investments and should always be analyzed carefully. Management refers to any methodologies used to guide individuals, businesses and governments in making decisions regarding investments, liabilities, assets, income and surplus.
Finance also encompasses the other components of financial science recognized by the US GAAP (Generally Accepted Accounting Principles). This includes principles, rules and regulations that govern how people, businesses and governments handle their financial resources. Rules and regulations specify what must be done and what must not be done when it comes to managing, collecting, transferring, securing, investing, and spending funds. They also determine which financial management tools may be used. These tools include: actuaries, asset managers, bankers, insurance agents, mutual fund managers, public business managers, regulatory professionals, real estate professionals, venture capitalists, and others.
It is through these various aspects of finance that we are able to understand, plan and control our financial affairs. There are many opportunities available for a person wishing to engage in financial services. The Internet has opened up many opportunities not only for financial professionals but also for students interested in finance. The field of finance and accounting is very diverse, and there is always room for someone who wishes to specialize in a particular aspect of it.
Finance and accounting graduates may choose to specialize in either micro or macro economics. Microeconomics deals with the small aspect of economics, such as a country’s consumption patterns, personal income, output, and government budget deficits and surpluses. Macroeconomics focuses on broad aspects of economy, including inflation, unemployment, international trade, and political economy. Finance and accounting graduates may also specialize in economic development, asset allocation, international business, corporate finance and financial risk management. There are also other specializations available in finance and accounting. The more areas one delves into, the more knowledge, skills and experience one can acquire.
Finance and accounting graduates may choose to go on to take further courses in finance including taxation, investment, macroeconomics and business. It is important to obtain at least an associate’s degree in finance before pursuing further courses that will broaden your knowledge and expertise in this specialized area of study. Those who wish to become licensed financial managers should complete a four-year bachelor’s degree from an accredited college or university before pursuing graduate studies in finance. For those who already have a bachelor’s degree in finance, an additional two years of graduate studies at an accredited university will allow you to pursue specialization in a different area of finance.