Finance is the science of managing funds and can be sub-divided into personal finance, business finance, and public finance. This subject-area includes such things as lending money, saving and investing, risk and return etc.

Banking is one of the major areas of finance. The principle of banking involves business entities and individuals depositing money into the bank and other business entities and individuals borrowing that money to use or invest. Those who borrow from the bank are charged interest. Those who deposit money in the bank can sometimes receive interest, although at a lower rate than those who borrow.

Investment is an important area of finance, and refers to the handling of financial assets. A good practical definition of an “asset” is something which generates an income. Many people think of cars, houses and other possessions as “assets” but that is misleading because those things usually cost money rather than generating it. One way to become rich is to buy assets.

Public finance involves the central banks such as the Federal Reserve System banks in America and the Bank of England in the UK. These institutions have a large amount of control over the economy of a country including monetary conditions and the ease of obtaining credit.

Stocks originate as part of corporate financing, where a corporation sells them to raise money for its own use. Stocks can be bought by individuals or other business entities such as pension funds. The financial management of a business, including profitability and cash flow, is one of the most important aspects of any business.

Personal finance includes many areas such as income, budgeting, borrowing and credit, debts and debt handling, expenses, insurance, and cash surplus as well as taxes and ways one can leave ones assets to future generations.