Finance is a vast field, and one cannot understand it without knowing its various aspects. Like any other field, finance also has its varied versions/types. To serve a vast industry, this sector cannot remain monotonous or similar everywhere. According to the needs of the financial transactions and survival as well as growth requirements, finance has to wear varied incarnations.
Here are the types of finance that can enlighten you on the versatility of this industry and understand the things better.
As the term suggests and you can also understand, personal finance is about an individual’s finances. It means the money of a single person. It counts a person’s money management skill and announces him/her responsible for every action taken in financial conditions.
If a person fails to save money, he is responsible for facing the money crisis and may need to take a loan. If he takes a loan, he is responsible for repaying timely. If he fails to do so; for example, he takes short-term fast loans no guarantor but skips the instalments he is responsible for poor credit. Similarly, if the same person manages money wisely, he can craft a great financial future.
The prime elements of personal finances are-
Personal finance is the first unit of the finance sector because it teaches the people of a big economy on how to succeed in their lives. They can contribute to the economy only if they know how to manage personal financial life.
Yes, you took it right! It is just opposite to personal finance. Public finance is the record of the revenue and expenditure and financial actions of the government. The factor of responsibility is attached here also and much more thoroughly than the personal finances. It is because the government of a nation takes money from the natives of the country. In the form of taxes, fees, security charges etc., it collects money to invest again for the well-being of the people of the nation.
Every small and big deed of the financial actions of the government needs to be justified because the money is destined for the growth of a country. It is all about the public’s money from making infrastructure for a country to investing in international joint ventures with the multinational companies.
Major elements of public finances are –
- Tax collection
- Income distribution
- National debt
- National budget
Public Finance holds the roots of the development and growth of an entire country. It is responsible for crafting the future for a country without making mistakes because the well-being of countless people is connected to it.
Corporate finance is about the management of capital sources and their use for the current and future well-being of a corporation. It helps in making the investment decision, financing decision, scaling decision, etc. This stream of finance works to justify the significance of a corporation to the shareholders.
It intensely focuses on the management of working capital and increasing its efficiency to maximize the performance of a business. The aim is to gain the best performance from the available financial resources. It also invests efforts in making relatable predictions about the financial health of a company.
- Analysis (statistical)
It contains the soul of the commerce world because business and commercial corporations are all about the money. They need capital for that, and corporate finance knows how to do that.
It is the small version of the finance field that aims to support businesses and individuals that do not have access to funds. It aims to bring the backward and less privileged sectors of the country in connection to mainstream development.
Microfinance has the power to change the destiny of a nation because it pours strength in the weaker classes of society. People who want to start a small business or take any initiative to earn a livelihood and live respectfully can always find help from microfinance.
The prime elements of microfinance are –
- The financial system against poverty
- Introduction of advanced microcredit practices
- Support for local businesses
- Lower cost loans on simple repayments
To be precise, microfinance is the actual soul of the growth in a nation. Unlike the conventional lending methods that have decided rules, it provides quick loans in the UK for very small businesses. It has become more significant in the current scenario due to corona issues.
Did you see how important it is to have different types of your finance in the money world? Every finance type has some sort of role in taking forward human civilization. They have emerged with time with the progress of humans. Now there are new financial tools and instruments to make money management even more convenient for individuals and corporations. From online calculators to chatbots and investment advisor robots, we are trying to make the world better with the help of finance and technology. Let the two walk together, and new miracles happen with time.