Finance is an area of economics and business administration that is dedicated to the study of obtaining capital resources and the transactions that involve investment and savings considering the risk and uncertainty that this implies. These types of resources are therefore known as financial resources.
Financial studies are concerned with money management. That is, due to the type of decisions that the different economies can take to better manage their resources, betting on their multiplication and the fulfillment of their corresponding objectives.
The world of banking, debt, business investment, and the stock market is part of the interests of finance. Thus, entrepreneurs in the Towing Service San Jose industry should examine their finances. This way, they can do their part in economic growth.
The formal study of finance is divided into two main branches
Corporate finance. That assumes the perspective of who requires funds or assets to invest, that is, who needs to generate resources.
The valuation of assets. On the contrary, it assumes the perspective of someone who has the capital to invest and wants to do it in the most profitable way possible.
Importance of Finance
Given the fundamental principle of all economics, which is that the resources available in the world are finite, while the needs that you must cover with them are infinite. Put in another way, money is not enough to do or have everything at once, the importance of a field of study such as finance is evident.
Finance allows individuals and organizations to play the game of capitalism in the best possible way. The aim is to obtain the necessary resources at the right time and keep the economic machine running.
Waste, bad investment, administrative disorder, and bad decisions can lead a productive and useful initiative to its downfall. Therefore, resource management is something that no one today can afford to ignore.
Differences between finance and economics
Finance is a sector or a branch of the massive world of economics. Thus, both disciplines are interconnected and affect each other.
Nonetheless, economics has a much wider focus. It studies how human needs can be met through the methods of production available to them. Viewed in this way, finances focus exclusively on what is related to money, and especially what is related to industry and the business world.