Finance Facts for Kids

Finance is all about how people, businesses, and even governments handle their money. It's like learning the rules of a game where the goal is to make and manage money wisely.

Finance helps us understand:

How money works and how it moves around.
Ways to control money so it can grow and make a profit.
How to take smart chances with money to earn more.
When someone "finances" something, it means they are providing money for a project or a business.

What is Finance About?
Personal Finance: Managing Your Own Money
Business Finance: Money for Companies
Financial Economics: Money and the Economy
Financial Maths: Using Numbers for Money
Images for kids
See also

What is Finance About?

Finance is the study of how people and groups manage their money. It looks at how they earn money and make a profit, and also how they spend money or deal with losses.

If a group earns more money than it spends, it can lend that extra money or invest it. This helps the money grow. If a group spends more money than it earns, it might need to borrow money or sell parts of its ownership (like stock). They could also try to spend less or find ways to earn more.

A bank is a place where people who want to lend money meet people who want to borrow it. Banks take money from lenders and pay them a small fee called interest. Then, the bank lends this money to borrowers. Banks help connect many different lenders and borrowers.

Corporate finance deals with how companies get money, for example, by selling stock to the public. Stock represents small pieces of ownership in a company. If you buy a share of stock, you own a tiny part of that company and its profits. For example, if a company has 100 shares and you buy one, you own 1/100th (or 1%) of that company.

Finance is used by everyone: individuals, governments, businesses, and all sorts of groups.

Personal Finance: Managing Your Own Money

Personal finance is all about how you, as an individual or a family, manage your money. It helps you plan for your financial future.

This part of finance looks at:

How much money you will need now and when you are older.
Where your money will come from, like from savings or by borrowing.
How to protect your money from unexpected problems.
How to pass on money to your children or grandchildren.
How taxes affect your money decisions.

Business Finance: Money for Companies

Business finance focuses on how companies find and use money for their activities. It's about trying to make more profit than loss. It also involves taking smart risks to have a chance at making more money for the business.

Financial Economics: Money and the Economy

Financial economics studies how the economy affects money matters. It looks at things like changes in prices and the supply of goods.

It also helps understand how risky certain actions a company might take are. It guides how a company should spend its money wisely.

Financial Maths: Using Numbers for Money

Financial maths is about using mathematics, especially statistics, to understand financial markets. It helps people make sense of numbers in the world of money.

To learn more about company finance, money, and investment management, check out Prof. Aswath Damodaran's work.
For more finance websites, you can visit Web Sites for Discerning Finance Students by Prof. John M. Wachowicz.
An introductory finance website from the University of Arizona is studyfinance.com.
For articles on mathematical finance, see quantnotes.
To learn about behavioral finance, explore the BF gallery.
For articles on financial analysis, visit Financial Analysis.
Learn how to practice good Financial Planning.

Images for kids

Bond issued by The Baltimore and Ohio Railroad. Bonds are a way for companies to borrow money.
Share certificate from 1913 issued by the Radium Hill Company. This shows ownership in a company.
The trading floor of the New York Stock Exchange in 1908. This is where stocks are bought and sold.
NYSE's stock exchange traders floor around 1960, before computers were common.
Chicago Board of Trade Corn Futures market in 1993. This is where people trade promises to buy or sell goods in the future.
Oil traders in Houston, 2009. They buy and sell oil.
A Wealth management consultation, where a financial advisor helps a client plan their investments.
The Dutch East India Company (VOC), founded in 1602, was one of the first companies to sell shares to the public.
President George W. Bush speaking about the United States federal budget in 2007.
A chart showing the US government's money coming in (revenues) and going out (outlays) in 2020.
Share prices listed in a Korean Newspaper.
People viewing prices on a ticker tape before the Wall Street Crash of 1929.
A modern price-ticker. These screens show live prices for stocks and other investments.
Crowds outside the New York Stock Exchange after the Wall Street Crash of 1929.
People queuing outside a Northern Rock bank in the United Kingdom to take out their savings during the financial crisis of 2007–2008.
Decision trees are tools used to help make smart financial choices by looking at different possibilities.
The "efficient frontier" is a concept in finance that helps investors choose the best mix of investments.
The Modigliani–Miller theorem, an important idea in finance theory from 1958, about how companies are funded.
A Babylonian tablet from around 549 BC, showing an ancient record of a payment.
The courtyard of the Amsterdam Stock Exchange in 1653, which was the world's first formal stock exchange.
The Dōjima Rice Exchange in Osaka, established in 1697, was the world's first place to trade futures (agreements to buy or sell something at a future date).