What is Finance, in this article we are going to discuss about the definition of finance (what is the meaning of finance), the finance from different contexts, Types of finance and its benefits.
The finance can be defined as the science and art of managing money in order to achieve the appropriate objective. You can see that there are two important components in the definition. First one is managing money therefore finance involved with managing money and the other component is appropriate objective that means finance involve managing money with an appropriate objective in mind.
What should be the appropriate objective in your mind when you are managing money?
finance is a wide area and it can be thought in different contexts like from Finance in personal context, finance in government context or finance in business context.
Mostly There are three different of finance.
There are four things or topics in personal finance
Total assets like her Property, Vehicle, Saving, Gold, Bank balance, Physical case Etc.
Total liabilities like her personal loan, home loan, Car loan Etc.
Investing goals depends on a person's income and how much he saves form income.
The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of financial planning work together in the most tax-efficient manner.
In this sudden situation, it is necessary that their financial position is correct? Will they be able to spend their lives in the future?
Insurance is a very useful thing in this situation.
If a person purchases an insurance product, the buyer is financially secure in any of conditions and it’s really important.
In other words, corporate finance means a financial management of compliance with four different types.
To understand Corporate finance, we will take an example, if a company has a project, then they will do the project planning that can make the company profitable. Now they have the project but do not have funds to work on the project, so the fund will have to be collected which is called Raising fund. The company has many methods for fund raising such as taking loan from bank or money lender, issue of shares, debenture etc. After all this, the company invests the Rising Fund on its project in such a way that they get maximum benefits and can also pay the Rising Fund in the company.
Now the company's next step will be monitoring, in which investment and extra expenses are reduced and profit, savings are exceeded.
There are four part of public finance
that is all we have on this topic if you have any question please do write in the comment section below and do not forget to subscribe to our newsletter for more such great post have a great time ahead.
Finance
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| What is Finance? Types of finance and its benefits. |
What is Finance?
What is the meaning of finance / what is financial planning / what is financial management / what is financial marketThe finance can be defined as the science and art of managing money in order to achieve the appropriate objective. You can see that there are two important components in the definition. First one is managing money therefore finance involved with managing money and the other component is appropriate objective that means finance involve managing money with an appropriate objective in mind.
Finance and appropriate objective.
Apart from this, we will learn about various aspects of money management as well as the appropriate purpose.What should be the appropriate objective in your mind when you are managing money?
finance is a wide area and it can be thought in different contexts like from Finance in personal context, finance in government context or finance in business context.
Personal finance context.
From Personal context if you think about finance it is the management of money for personal objective for example if you are thinking about personal finance perhaps you will think about.- How to earn adequate amount of money?
- How much money to spend and save?
- How much to borrow if necessary?
- How much money to invest?
- Where to invest the money?
- When to invest the money?
Government finance context.
Government context the finance will be dealing with a generating government revenue for example if you are thinking about government finance. Perhaps you will think about-- How much to tax?
- Public spending
- The budgets amount of public
- Spending budgeting government debt
- Production distribution of public goods
Business finance context.
Business context of finance then it will be dealing with for example if you are thinking about Business finance. Perhaps you will think about- In what fixed assets should we invest our money?
- How to raise money for the investment of the business?
- How to manage the short-term cash flows?
- How much to reinvest in the business?
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| Types of finance |
Types of finance.
So far, we have known what is finance, now we will know how many types of finance are there.Mostly There are three different of finance.
- Personal Finance
- Corporate Finance
- Public Finance
Personal Finance.
You will see personal word already in Personal Finance that means this is the finance management and financial planning of a person like me and you.There are four things or topics in personal finance
- Financial Position
- Investment Goals
- Tax Planning
- Insurance
Financial Position
To know the financial position of a person, the financial position is obtained by dividing his total assets (expenses) in his total (liabilities) endowment.Total assets like her Property, Vehicle, Saving, Gold, Bank balance, Physical case Etc.
Total liabilities like her personal loan, home loan, Car loan Etc.
Investment Goals
Every person has certain goals or dreams in life, such as getting their own home, studying for children, own business, foreign vacation and many more investment goals that they want to meet.Investing goals depends on a person's income and how much he saves form income.
Tax Planning
As we know, the government has to pay a small part of the income as tax every year. The government gives us different options to avoid this tax under Income Tax ActThe purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of financial planning work together in the most tax-efficient manner.
Insurance
In the future, if an accident happens to someone accidentally, and that person is the only source of income in their homeIn this sudden situation, it is necessary that their financial position is correct? Will they be able to spend their lives in the future?
Insurance is a very useful thing in this situation.
If a person purchases an insurance product, the buyer is financially secure in any of conditions and it’s really important.
Corporate Finance
As we have read that personal finance belongs to only one person, in the same way company, institutions come in corporate finance.In other words, corporate finance means a financial management of compliance with four different types.
- Planning
- Raising fund
- Investing
- Monitoring
To understand Corporate finance, we will take an example, if a company has a project, then they will do the project planning that can make the company profitable. Now they have the project but do not have funds to work on the project, so the fund will have to be collected which is called Raising fund. The company has many methods for fund raising such as taking loan from bank or money lender, issue of shares, debenture etc. After all this, the company invests the Rising Fund on its project in such a way that they get maximum benefits and can also pay the Rising Fund in the company.
Now the company's next step will be monitoring, in which investment and extra expenses are reduced and profit, savings are exceeded.
Public finance
Public finance is the study of the role of government in the economy. How government manages their fund to the economy of the country that is the discuss in the public finance.There are four part of public finance
- Public income
- Public expanses
- Public debts
Public income
In the public income, the government has different types of income, such as schools, hospitals that it runs, taxes in different ways, penalties etc.Public expanses
Works in creating infrastructure of country using public income in government expansions. Developing schools, hospitals, Provided Transport Services, Provided Gardens, parks all come under the responsibility of the government.Public Debts
Public debt is a situation in which public expenses are increased by the government compared to public Income.In such a situation, the government uses public debt. It happens in two ways- Internal public debt
- External public debt
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| Importance and Benefits of finance |
Benefits of Finance
Suppose that you are bank 🏦 and your work is to borrow money from RBI and provide loan to an industry and then industry will provide goods and good will circulate by seller to buyer and last circulate till consumer. So, we can say that we are provide services to consumer and also getting profit. So whole cycle based upon money and also benefit of finance.Signification (importance) of Finance
Significance of finance like a soul in our body. If there is no soul, we are dead. Same in finance sector if there are no finance in the company or institute there are no programs. And we can say that its totally dead. Finance is a core elements of finance sector. Like a sun and all the other planet rotate around it or we can say that its mandatory thing and all the development and economy based on finance. We can’t bring development and any work without finance.that is all we have on this topic if you have any question please do write in the comment section below and do not forget to subscribe to our newsletter for more such great post have a great time ahead.
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