Personal Finances

• Personal finances are essential to obtain such basic provisions as food, shelter and clothing. Beyond the acquisition of needs, personal finances also function to provide other items to enhance the quality of life. Finances are relevant not only to present-day needs, but also factor into an individual's preparedness for the future. CNNMoney.com recommends consulting a professional financial planner to develop an asset allocation plan. Such plans take into consideration current and long-term goals, such as paying for college tuition or funding a retirement.
  
  

Corporate Finances

• Much in the same way that personal finances are concerned with survival, so is the case with corporate finances. Companies ultimately need to earn a profit to stay in business and this means keeping a close eye on expenses versus income. Unlike personal finances, though, corporate finances have a far greater impact on society as a whole. The financial actions of corporations do not merely affect their own employees. Investors depend on the fiscal health of companies, and this in turn affects broad sectors of the economy.
  
  

Basic Principles

• The basic principles of finance begin with the movement of money and other assets. When an individual or corporation acquires property or finances, it is referred to as "income." Individuals and companies must obtain goods and services for either survival or advancement. The assets used for this purpose are referred to as "expenses." When a company has greater income than expenses, it has achieved a "profit." The basic goal of any business is to be as profitable as possible.
  
  

Misconceptions

• A major financial misconception stems from the area of debt and debt management. Despite connotations to the contrary, debt is not necessarily negative. Responsible and timely repayment of debt can help individuals and corporations achieve a greater credit rating. This can, in turn, be used to receive better rates of finance and enable the purchase of larger goods, such as a house or business. Some debt is more essential to obtaining lower interest rates than others. An example of this is money owed from a student loan, which is "secured" debt.
  
  

Warning

• When making financial investments it is prudent to conduct research on any individuals or firms who are handling your money. Criminals use a variety of schemes to try to poach money earned by hard-working citizens. One example is the infamous "Ponzi" scheme. Named after Charles Ponzi, this scheme promises to pay investors a certain profit, but uses the investments of later investors to pay those at the beginning of the scam. To avoid scams, make sure financial investors are licensed and registered with the government.