Finance can be broadly described as the science of money management. Money is a basic necessity in all areas of life. Be it for personal purposes, business purposes or public service, proper management of money is the key to achieving desired results.
Finance is mainly of three types : personal finance, corporate finance and public finance. Personal finance is money management for personal needs. It is specific to each individual. This includes managing day-to-day expenses, saving for the future, retirement planning etc. Personal financing methods vary with different people. It depends on factors such as an individual’s current financial position, his expenses and his desires and goals for the future. After creation and execution of plans for personal financing, regular monitoring and analysis is done to determine whether a change in strategy is necessary.
Corporate finance refers to money management with relation to a corporation or a business. All the financial activities related to running a corporation come under corporate finance. Every business requires adoption of proper financing methods to ensure that it does not go into loss. The primary goal of corporate finance is to maximise or continuously increase shareholder value. A corporate financer has to handle everything from capital investment decisions to investment banking. Inventory control and management of current assets and liabilities also come under corporate finance.
Public finance involves management of money by the government. Every government requires funds for its functioning . The govenment’s income and expenditure should be kept balanced by the proper management of its resources. The activities coming under public finance include mobilization of resources, prioritization of government programs, deciding on the budget for a specific program etc. Public finance is important as the government is accountable to the citizens of a country. The methods adopted for public financing will decide the economic status of a country.