Finance: Definition, Types, Functions and Benefits

Actually the word financial is an absorption from English financial which means all things related to finance.

When talking about finance, it cannot be separated from the word finance which means finance. This word comes from the Latin, financius.

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Finance: Definition, Types, Functions and Benefits

Many things that are learned in finance, such as managing, developing, and empowering money, also include calculating opportunities and risks in the future.

Not only companies that need to have good financial management. Organizations, countries, and even individuals need to learn about finance.

Types of Finance

As discussed earlier, finance has several types. There are at least three types of finance, namely, state or government finance, corporate or organizational finance, and individual finance. Here's a further explanation.

Country or Government

The health of state finances can be seen from many factors. This is because in a country there are many aspects that must be taken into account. Some of them are currency exchange rates, people's purchasing power, poverty rates, as well as exports and imports.

Company or Organization

Furthermore, the financial condition in the company or organization. This includes the benefits for the business owner, the ability to survive and grow, also includes meeting needs in the short and long term.


Individual finance is simpler than the two mentioned above. A person's financial condition can be seen from income, debt ratios, and also assets owned.

Financial Function

Financial management is not only carried out by the state and companies, you as a person of productive age must also be able to.

The function of finance is very important to apply in your life. Here are some of them.

Planning Function

In finance, planning is very important. Without planning, finances can fall apart. That is why there is a planning function or planning function.

You need to balance between income and expenses every month. However, spending less than income can allow you to save to meet larger needs.

Control Function

Careful planning is meaningless if you don't do it. Therefore, a controlling function is needed in finance. If you can't control your spending, of course your finances will be disrupted.

Inspection and Reporting Function

The last is the inspection and reporting function or the inspection and reporting function. This is important so that you can evaluate your finances. This can be done regularly every week or every month and also every year.

After a certain period of time, review your financial performance.

Is your budget correct? Are there expenses that are over or perhaps under budget? What about your financial targets.

By doing inspection and evaluation, you can find the right and suitable strategy for personal money management.

Financial Benefits

Managing finances is very important to have a healthy financial condition. If you manage to do financial management well, the following benefits can be obtained.

Better Financial Planning

After knowing the principles of finance, you will be able to do more mature financial planning. You can manage your monthly income more wisely to meet your daily needs.

Not only daily financial planning, you can also make plans for future needs. Saving and investing becomes a habit that will be done without coercion.

Learn to live frugally

You will be more able to appreciate the money earned. When you know your financial goals and have a solid plan, you will be encouraged to live frugally. You can apply various ways of living frugally so that you can meet future needs.

Successfully Achieving Financial Goals

With financial planning and discipline, of course you will succeed in achieving financial goals. Whether collecting emergency funds, preparing wedding funds, retirement funds, to financial freedom. You will no longer have trouble managing finances.

Develop Your Own Money

In addition, you will also be encouraged to develop the money you now have. This is because you understand that relying solely on monthly income will not be able to help meet future needs.

You will start building a business to earn extra money. You will also start to take advantage of investment instruments for profit.

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