Finance is a broad subject that many people refrain from learning more about. Some throw their hands in the air, claiming it is just too complicated for them, while others feel that there is something deeply immoral about the whole thing and that a Good Person should refrain from dwelling upon it.
But regardless of how we feel about finance, it does impact our lives and the lives of those we care about. Learning more about personal finance, corporate finance, and public finance can help us make sense of the world, and our decisions can be more well-informed.
On this site, we aim to answer our reader’s questions about finance clearly and concisely which is accessible to anyone. If you want to know more about anything, please don’t hesitate to send us your question using the email form.
Personal Finance
Personal finance involves things such as income, spending, tax management, savings and investments for an individual. For people with a family, this usually means taking the entire family’s needs into account when decisions are made regarding personal finance.
Personal finance involves both short-term and long-term planning and allocation of resources. Ideally, a household budget should deal with short-term issues and have budget posts dedicated for long-term savings and investments. In most industrialized countries, insurance is an important aspect of personal finance since it helps individuals and families manage risk. Insurance can also be a way of saving money for future needs.
Public finance
Finance related to sovereign states and sub-national entities (such as states, provinces, counties, municipalities, school districts, etc) is known as public finance. Government revenue and government expenditure are two very important aspects of public finance. Political discussions regarding public finance tend to, in essence, revolve around the government’s impact on the distribution of income, efficient allocation of resources and macroeconomic stabilization.
Public expenditure is usually financed by taxes and other fees, but public revenue can also come from public investments, publicly owned profitable businesses, donations, the sale of publicly owned resources, etc. If the streams of revenue aren’t large enough to pay for expenditures, bonds can be issued to bring in cash.
Central banks are key players when it comes to public finance, partly because they are lenders of last resort.
Corporate finance
Corporate finance is the area of finance that focuses on corporations, e.g. the funding of corporations and the capital structure of corporations. By corporation, we mean corporations in the British English sense of the word, i.e. all incorporated entities – large and small. (In American English, the word corporation is often reserved for large incorporated entities only.)
An important aspect of corporate finance is investment analysis and capital budgeting, where analysts try to determine if potentially value-adding projects carried out by the corporation should be financed by equity or by debt capital.
Questions about investing
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