What is the True Modern Definition of Finance?
There is a profound issue with modern finance these days. Many people across the country tend to question exactly what finance means in today’s world, where the rich continue getting richer and the poor find themselves struggling to make it anywhere in a world where money is a requirement to survive.
What is the true modern definition of finance? Well, the answer is not quite as simple as most would have you believe, unfortunately. Some believe that what happens in the financial market is unsubstantial, with very little value actually being brought forth to the people. This is a massive problem, you see.
Looking back, the financial system in the nineteenth century actually worked quite well. Entire new enterprises and companies were founded, with thousands of jobs becoming available for the hard-working American seeking their way in life.
Today, the financial market regularly deals with uncertainty. A single wrong investment is capable of crashing an entire business to the ground, or flattening the country’s economy into nothing. That is a scary thought but one that is all too real right now.
You see, finance today deals with investments. This includes assets and liabilities, which can either blossom into pure profit over time or simply flounder and count as a loss for an individual or a company. Modern finance tries to price assets based on the risk level involved and the rate of return for each asset.
Most people are interested in personal finance as it affects them more often than any other type. This specific type of finance revolves solely around creating a security blanket around yourself and your family. Protection against unforeseen events, transferring weal across generations of a family, tax policies, credit, and the development of a savings plan are all major parts of personal finance. To the everyday individual, this is far more important than any form of stock market trading.
So, what is the true modern definition of finance? The answer to that question is simple: security. Every single person on this planet seeks security from anything bad happening. Money is a requirement to survive today when medical bills cost thousands, car payments are hundreds per month, and a trip to the grocery store can empty a bank account with ease. Financial security is the only thing most people care about anymore. Today’s modern world focuses on income and expenses over almost anything else available now.
David Milberg is an entrepreneur and an investment banker from NYC