Adding Profit To Your Lives

“Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor. It’s about stewardship and, therefore, about achieving a good society.” — Robert J. Shiller

Finance in simple terms is the management of money and any other valuables which are equivalents to money. Finance is associated with sustentation and creation of economic wealth or in simpler terms, money. It describes the study of money, banking, credit, assets, and liabilities. Some terms may seem a bit difficult to understand for beginners.

Banking can be defined as a business venture of receiving and safeguarding money owned by people and then lending out this money in order to gain profits.

Credit is explained as a lawful agreement in which the borrower receives some value of wealth now and agrees to pay it back to the lender later.

Coming to assets and liabilities, they are opposites to each other. Anything that can put money in your pocket is an asset and anything that can take money out of your pocket is a liability.

A basic question which strikes our mind is; why do we need to know about finance or more importantly self-finance? Well, be it a multinational company or a normal middle-class family, finance revolves around three processes- budgeting, spending, and saving. In this modernized world, where everything revolves around money, finance gives an edge to maintain your current position and new opportunities for people to start making most of their money. Finance can be used to evaluate assets and liabilities, to have a better understanding of the present situation of a company or one’s own wealth. Self-finance is as important for an individual as finance is important for any company. Self-finance gives us the wings to know more about past records, present happenings, and estimation of our future endeavours.

Economics belongs to the same family as finance. Both go hand in hand with each other and the existence of one is almost impossible without the other. Economics is the social science that deals with production, distribution, and consumption of goods and services. In simple terms, it is the study of human interaction in which people trade for what they have with what they want. Not going to the depths of this vast subject, we will just go through some of its mainstream examples which we require for the basics of finance.

We all have encountered the terms like taxes, GST, goods, services, etc. in our daily life going in our ears continuously through media, news channels and gossips. Well, we’ve never really understood them correctly.

Goods are anything that yields satisfaction to someone or that is required to satisfy someone’s needs or desires. Intangible goods are called services.

A tax is a mandatory financial charge or some other type of levy imposed on a taxpayer by a governmental institution to fund various public expenditures. Failure to pay taxes is a punishable offense.

GST abbreviates for Goods & Services Tax. This taxation system is broadly divided into two parts (i) intra-state and (ii) inter-state. At the intra-state level, two types of GSTs are levied CENTRAL-GST (CGST) and STATE-GST (SGST). At the inter-state level INTEGRATED-GST (IGST) shall be levied, In the case of inter-state level IGST would be 18% and in case of intra-state CGST and SGST will both be 9%.

Coming back to finance, we can mainly classify finance into three types-


Public/Government finance is the management of a country’s revenue, expenditures, debt load through various government institutions. It consists of a collection of taxes and other revenues and arrangements of such funds on various parts of the country and its duties.


As the name suggests, corporate finance is the management of the company’s funds and its sources. It includes the appropriate uses of its capital as well as the management of its profits and losses. Financial activities are related to running a company with maximum growth possible in its domain.


Personal finance relates to the management of any person’s income which he/she is earning, or someone’s expenses, investments they have made in the market, and obligations. Irrespective of anyone’s job, this is the most important type of finance in anyone’s life. This can be managed at a personal level without anyone’s help. It requires some amount of knowledge at a basic level which could assist you to understand and control the trend of your money.

Putting some light on the self-finance part, this part is the most fascinating of all if we understand and imply it in our lives. Someone said that we should make the best of what we have, well, you can’t find a better place than this to apply this statement. This is a single-player game where everything lies in your hand and your grey matter. The main point is, money at rest is of no use, you have to make your money work for you.

“You must gain control over your money or the lack of it will forever control you.” — Dave Ramsey

Self-finance is a dynamic process that requires regular monitoring and re-evaluation. Basic steps of self-finance involve:-

  1. ASSESSMENT- Involves compiling simplified versions of income statements, values of personal assets and it should also include the value of personal liabilities to be covered.
  2. GOAL SETTING- Includes a mix of short-term and long-term goals. This is done in order to meet specific financial requirements.
  3. PLAN CREATION- This involves steps to be taken. Be it reducing expenses, increasing work salary or investing somewhere.
  4. EXECUTION- The most difficult part of all, it requires discipline and determination. Most people fail in implementing this step. Sense of fear and nervousness may set in. But this is where the battle begins.
  5. MONITORING- Includes monitoring your judgments and money. Several changes to the initial plan can be made here.

Reaching towards the end, we’ve gathered knowledge about finance and a little bit of basic economics. I guess you must have realized the need of knowing your finances. It’s never neither too late nor too early to start handling your finances.

Some basic steps like

-tracking your net worth

-setting a budget

-taking daily money minute

-setting specific financial goals

-investing in Systematic Investment Plans (SIPs) for lower age groups

-learning how to savor

-give money to get money, etc

Covering these basic steps will lead to advanced levels of personal financing gradually.

“The struggle for Financial Freedom is very unfair. Just look at the rewards.” — Manoj Arora

More blogs to follow!!

Arsh Kandroo, Team Technothlon 2020

Technothlon is an international school championship organized by the students of IIT Guwahati. Technothlon began in 2004 with an aim to ‘Inspire Young Minds’

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