Finance is a broad term used to describe things regarding the management, production, and research of funds and investments. Many of the economic concepts that we use in day-to-day living are related to the world of finance, including asset pricing, interest rates, financial planning, the time value of money, and more. The field of finance is expansive, and there are many different types of professions that deal with financing, including bank tellers, insurance professionals, real estate professionals, financial planners, mortgage brokers, corporate finance professionals, and so forth.
As mentioned, there are many different theories regarding finance, including those based on macroeconomics and microeconomics. Macroeconomics is the study of the larger economy as a whole. Microeconomics is the study of specific industries or regions of an economy. These theories are combined with behavioral science in order to produce specific models of the behavior of the financial markets, including the way people interact with them. Models are then used to create economic scenarios that are likely to happen, and to evaluate the results of those scenarios.
There are many modern financial theories that have been developed over the years, including the theory of asset pricing, known as Taylorism. This theory postulates that markets fluctuate in a self-stabilizing and self correcting fashion. This has been used in the development of economic indicators such as indices of demand, which are commonly used by businesses to make decisions concerning their marketing strategies and activities.
Another branch of modern finance that is vital to the functioning of the economy is public finance. Public finance concerns governmental organizations such as the government, cities, counties, corporations, nonprofit organizations, and the like. It also applies to private non-profit organizations and groups such as clubs, labor unions, charities, and even special interest groups. Public finance theory assumes that the government should use its resources to assist citizens in attaining financial abundance through sound investments. A good example of this theory would be the grants provided for research, which are often given to organizations that will create the cures for diseases that afflict society as a whole.
Another branch of modern financial management is the area of time management. This is important in all areas of life, not just finance. The key concept behind time management is that humans can live better and longer lives if they plan things ahead. Finance is part of planning ahead, but it is only one part of the overall picture. A good example of time management would be the deliberate practice of saving for retirement. This reduces the amount of financial risk that a future human living alone would experience, by ensuring a high rate of return.
One more branch of modern financial theories is market economics. In this field, economics attempts to understand how the supply and demand of particular markets affect the prices that are charged for goods and services in that market. Two main areas of business interest in this area include: the business cycle and monetary policy.
The last main article in this series is about money management. Finance considers what households spend their money on, why they spend it, how they get it, and how to best use it. Like business, there are many different areas of finance that an individual could study. This includes budgeting, savings, investing, spending, and other such methods.
The main article in this series covered how individuals can make the most of their money through investment strategies. That article explained that finance majors can be put on the same level as other graduates that want to major in the field. There are many jobs available in financial economics, which include research positions and managerial work. With so many different opportunities for employment, finance graduates should have no trouble finding their dream job.