managed. It can be considered as the next logical step because first you need to create money and then you need to learn how to manage it.
Like economics, finance can also be broadly divided into two main categories namely
- Corporate finance
- Personal finance
Corporate finance is a vast field on its own. It deals with money management in the corporate sphere. Companies and business, big and small need to manage their money properly in order to keep track of their revenues, cost, expenses and profit. Managing money is also vital because tax needs to be calculated on the figure for profits. This isn`t something that just anyone can do, professionally qualified accountants are required to manage the finances of corporations and businesses. This is a job that has a very small margin of error as a single badly timed or badly thought out decision can result in losses.
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Personal finance on the other hand deals with how individuals and families manage their money. It can cover anything from budgeting to mortgages to personal investment decisions.
Finance also deals with ways to create funding for companies and individuals. If you look at the whole setup of global financial markets, the stock markets, banks, derivatives markets, forex and now blockchain based financial products. Then you will see that this is all under the umbrella of finance.
If you want to contrast it with economics here, you can see that while economics deals with how to tax, whom to tax and how much to tax. Finance deals with how to calculate tax. If economics tells you when and how to create money then finance tells you how to take that money from the Central bank and give it to the end customer. Economics only knows how to create money; finance tells you how to use money. Think of it this way, economics is the branch that takes the decisions and finance is the branch that implements those decisions. Although these two are not the same but both disciplines are connected with each other. If economics makes the world go round then finance is the fuel that economics needs.
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