January 24, 2019 | Purdue University Global
If you think the only people who need to understand finance are those who work in banking, it's time you reconsidered your worldview. Whether you realize it or not, there's a good chance that you use finance every day. Studying finance, it turns out, can have a huge impact on your life—and it's probably not as difficult as you might think.
What Is Finance?
Investopedia defines finance as:
In practical terms, finance refers to all of the money-related decisions consumers, businesses, and governments make on a daily, weekly, and yearly basis. It’s similar to accounting, but there is a key difference:
- Accounting centers on the collection and analysis of financial information.
- Finance is more concerned with the implications that arise from employing various money management strategies.
Whereas an accountant would seek to analyze financial data to produce a report, a finance expert would be more inclined to synthesize that information to generate an actionable recommendation.
In other words, finance helps us make better decisions with our money and accounting enables us to keep track of it. You use finance in innumerable everyday financial scenarios, such as:
- Making a budget for your groceries
- Deciding how much of your paycheck you want to save and how much you want to invest or spend
- Considering whether to pay your credit card balance in full each month
Americans Need Better Financial Education
There's a real need in the United States for better financial education. Numerous studies have found that most Americans are lacking when it comes to financial literacy:
- 63% of Americans couldn’t pass a basic financial literacy test, according to the most recent Financial Capability in the United States report by the Financial Industry Regulatory Authority (FINRA). The study found that Americans have difficulty making sound financial decisions in real-life scenarios.
- 59% of Americans don’t have a budget, 25% don’t pay all their bills on time, and 8% have debts in collection, according to the National Foundation for Credit Counseling’s 2018 Financial Literacy Survey.
- Only 5 states—Alabama, Missouri, Tennessee, Utah, and Virginia—received an A grade for their approach to teaching personal finance to high school students, according to Champlain College's Center for Financial Literacy 2017 Financial Report Card.
Poor financial literacy and money mismanagement have a particularly insidious economic effect, as many experts believe elevated household debt levels are among the causes of the last recession (for examples, see this report from the Federal Reserve Bank of St. Louis and this interview with University of Chicago economist and author Amir Sufi).
This lack of financial understanding among Americans is troublesome and underscores the great need for financial education.
Why Study Finance?
Given such dire circumstances, it's not surprising that many people are considering studying finance. Indeed, business—the discipline that finance falls under—remains the third most popular college major in the U.S., according to a 2018 report from the National Center for Education Statistics. Studying finance can prepare you not only for careers in the financial services sector, but also for tasks in your everyday life.
There are many different routes students considering studying finance can take. A bachelor's degree in finance, for example, can prepare you to work in corporate and government financial management, banking, and financial planning. And because finance revolves around planning and analysis, studying finance and becoming more financially literate enables people to make better personal financial decisions.
Pursuing graduate coursework in finance only bolsters these fundamentals. Besides improving a person's chances of being hired, a master of science in finance can also help you hone your critical-thinking and problem-solving skills, which you can then use to make sound financial decisions.
Job Growth Outlook for Finance Roles
A bachelor’s degree in finance can prepare you to work in a number of business roles, including:
- General and operations manager
- Financial manager (predicted growth: 19%)
- Budget analyst (predicted growth: 7%)
- Credit analyst
- Financial analyst (predicted growth: 11%)
- Personal financial advisor (predicted growth: 15%)
- Loan officer (predicted growth: 11%)
The Bureau of Labor Statistics is the government agency that researches, analyzes, and publishes statistical data on the U.S. labor market and makes employment growth projections based on this data. While the BLS doesn’t make projections for all the roles listed above, it does predict that employment of business and financial operations occupations in general will grow 10% from 2016 to 2026, adding about 773,800 new jobs to the U.S. economy (individual occupation growth projections have been noted above for individual roles).
Growing employment opportunities in a variety of corporate, nonprofit, and government settings make finance an exciting and rewarding career. When you combine that with the obvious benefit to your everyday financial decision-making skills, a finance degree could be a smart decision for those seeking a career in business.
Earn Your Finance Degree 100% Online
Purdue University Global offers the Bachelor of Science in Finance and the Master of Science in Finance, which is accredited by the Accreditation Council for Business Schools and Programs (ACBSP).* Both degree programs are offered completely online, giving you the flexibility that your busy schedule demands. Take the next step toward a finance degree and request more information today.