Understanding Public Finance

Finance is the art or science of acquiring, maintaining and managing money, either as an investment or for consumption. It deals with the systems that help us acquire, manage and save money. A financial professional is someone who can explain to you all that finance means to you. Finance can be a very tricky subject and one that requires some serious study.


In order to have a clear understanding of finance, it helps to know what it is not. Finance is not investing in any commodity or asset. Finance does not create wealth but is about providing resources to meet certain needs. It also involves the process of creating an account of the risk-free or risk-adjusted assets. These accounts are managed by banking institutions for purposes such as saving for retirement, insuring property and protecting wealth, paying debts, or buying large capital assets such as houses or corporate buildings.


The first thing you need to know is what finance is and what it does. The first article in this series of articles will begin to give an explanation of what finance is not. In particular we will discuss three important but often neglected areas of financial planning. All three are areas that require careful attention if you expect to do well as a savvy investor and financial planner. The main article in this series will conclude this discussion by briefly exploring what role the government can play in your finance portfolio.


Public Finance A main area of public finance is the distribution of revenue. This is an area of regular government finance that is necessary to operate a government. The distribution of revenue is done through taxes; normally at a progressive rate. Two main areas of public finance are personal and business taxes.


Savings and Debt Finance In the United States, savings and debt finance to refer to the practice of borrowing money in order to make future payments on a loan. A popular example of this is home mortgages, which can be secured or unsecured. The practice of banking is useful for a variety of purposes, including financial planning and investment. There are two major types of banking: commercial banking and thrift banking. In general, savings and debt finance appeal more to people who have access to credit.


The fourth area of public finance concerns the management of the national economic system. economists and other social scientists in this field of study argue that traditional economics does not adequately capture the process of organizing economic activity in the real world. They therefore call public economic policies as being “principles” rather than “laws”. In their view, principles are more realistic in that they capture basic economic theory and apply it to real world settings. Principles also are closely tied to economic theory, which they also claim is incomplete without a detailed account of human behavior.