Public Finance and Private Finance

[davidpeter]

Public Finance and Private Finance are two branches of finance.

Finance can be divided into two broad categories :-

1.Private Finance
2.Public Finance

Private Finance can be categorized into :-

i.Personal Finance :-

It basically deals with the optimization of finances in the individual (single consumer, family, personal savings, etc.) level subjected to the budget constraint. For example, a consumer can finance his/her purchase of a car by taking a loan from any bank or financial institutions.

In short, it can be said that Personal Finance is financial planning on the individual level. It deals with the utilization of the monetary resources by individuals and families by means of budgeting, saving and spending after taking into consideration the probable life events of the future and risks associated with them. Personal Finance generally includes :-

(a)Savings account
(b)Insurance policies
(c)Consumer Loans
(d)Stock market investments
(e)Retirement plans
(f)Managing of income taxes
(g)Credit cards

ii.Business Finance :-

It tries to optimize the goals (profit, sales, etc.) of a corporation or other business organization by estimating future asset requirements and then allocating funds in accordance to the availability of funds.

Business Finance deals with the monetary provisioning at the commercial level. A business constantly requires capital based on different perspectives :- Short-term
Medium-term
Long-term

[Shane Watson]

Nice theoretical explanation on the types of finance. What about the public finance? I think it is a bigger sector as well. So, when we can expect public details?

[am_vanquish]

Seems to me that some Business Finance could also be considered "Public" ... in that the financial decisions of large corporations can have very signficant impacts on the general public. This looks like something that was taken from an entry-level Financial Management college textbook. That said, I find that many academic-types (especially in finance) have a tendency to create theoretical "labels" that do not translate very well into real-life situations. Still, I'm interested to see how the author (presuming this is a textbook) defines "Public Finance."

[tmvijai]

I am guessing Public Finance is how the government Treasury deals with monetary aspect. How the funds are distributed to plans and so forth. Corporate or Small company, it is a Business run by people and share holders. I don't think it can be public.

[conancare]

Hi David,
Your post are informative but it is missing with examples and illustration. I am sure that will help in understanding.

Regards
Conan
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