In a nutshell: Finance and economics share some similarities, but students and professionals should know what sets them apart.
Finance and economics are distinctly different disciplines, but share a number of similarities, from the personality types suited for careers in these fields, to the required courses for degrees in finance and degrees in economics. Prospective students can examine both fields to determine which is the best fit for their skills and interests.
Finance and Economics Defined
“Finance” is a comprehensive term that covers a number of sub-categories, including personal, public and corporate finance. It can be described as the study of how money is acquired and managed, and involves activities ranging from investing to obtaining and granting loans.
The study of finance is based in economics and focused on the flow of money, interest rates, risk management, rates of return, financial markets and other business-related topics. Finance professionals advise businesses and investors on sound investments, capital allocation and financial management.
Economics is the study of how goods and services are produced and distributed. More broadly, it is the study of how people choose to use resources, including time, land, capital, buildings and tools. Economics is a social science that relies upon quantitative analysis and mathematics.
Economists are influential in a number of areas, from guiding national policy to advising investors. They analyze, predict and communicate economic conditions and their impact on stocks, local, national and international financial markets and supply and demand.
Degrees in Finance and Economics
Students pursuing degree programs in either finance or economics will take classes to develop their communication, problem-solving, mathematical, quantitative and analytical skills. Fundamental coursework may include business basics such as management, accounting, economics, statistics and finance.
Specialized coursework for a finance degree typically includes investments, financial institutions, international finance and managerial finance. Financial analysis degree programs provide advanced instruction in risk management, portfolio management and financial engineering.
Once economics majors have mastered the essential business curriculum, they move on to focused study of demand theory, production and cost theory, market structure, budgeting, and international economics.
Careers in Finance
A degree in finance can lead to a number of career opportunities:
- Financial analyst: Financial analysts advise businesses and individuals about investments, based on their expertise in analyzing the performance of markets, stocks and bonds. They work in the private sector for financial institutions, investment firms, insurance companies and consulting firms, or for government agencies. Common job titles in this field are risk analyst, fund manager, portfolio manager and ratings analyst. The Bureau of Labor Statistics (BLS) projects 16% growth in employment in this category by 2022.
- Personal financial advisors: Personal financial advisors are also expected to be in great demand in coming years, with a 27% increase in employment by 2022, according the BLS. These finance professionals offer advice to individuals regarding investments, retirement and insurance. They are often self-employed consultants, but many work as private bankers or wealth managers for financial institutions.
- Financial examiners: Financial examiners are employed by the finance and insurance industry, or local, state or federal agencies. They ensure compliance with laws that govern financial institutions by examining bank records, monitoring financials and evaluating loan risk. These professionals evaluate the health of financial institutions to ensure the financial system’s stability.
Careers in Economics
A bachelor’s degree in economics is the first step to such careers as:
- Budget Analyst: Budget analysts work in the public or private sectors, establishing budgets, reviewing funding requests and making recommendations regarding financial decisions. They may work for businesses, government agencies or educational institutions. The BLS projects steady growth for budget analyst jobs in the coming years.
- Management analyst: Management analysts help organizations improve efficiency by gathering and analyzing financial and other data, solving problems, and proposing alternative processes and procedures. This is a high-demand field, as the BLS projects management analyst jobs to grow by 19% through 2022.
- Tax Examiner: Tax examiners work for local or federal agencies, ensuring that tax revenues are properly collected from citizens and businesses. They review tax returns, conduct audits and collect overdue taxes.
Choosing Between Finance and Economics
Success in a finance or economics career requires certain skills and attributes, such as communication skills, a knack for numbers and being detail-oriented. Whether you’re working with individuals or companies, either field involves working on complex projects, solving problems and making recommendations for action.
Choosing between a degree in finance or economics depends upon the position you seek, and the career that interests you the most. Explore careers in finance and economics to determine which degree is needed for the one that fits you best.