Weigh the benefits of a finance degree to determine if it’s the right degree for you. Explore the different degree levels, and get answers to your questions about finance degree programs.
What Is a Finance Degree?
Whether it’s a graduate or undergraduate program, a finance degree gives you the tools you’ll need to navigate the complex world of economics, financial management, banking, and global financial markets. You can find programs that focus specifically on finance, but if you’re looking for a bit of a more well-rounded education, there are also programs that concentrate on finance topics within a core curriculum of multidisciplinary business concepts. Whether you go for a major or a concentration, having strong math, problem-solving, organization, and analysis skills will serve you well as you complete your program.
Types of Finance Degrees
Many schools in the U.S. offer finance degrees at the certificate, associate, bachelor’s, master’At every level, you can choose from traditional on-campus programs, online programs, or a mix of the two that are available either full-time or part-time.
Associate Degree in Finance
An associate degree in finance introduces you to foundational financial concepts and practices. You can usually earn an associate degree in two years with full-time study. After graduating, you can either qualify for entry-level finance jobs, or you can transfer credit to pursue a bachelor’s degree.
Bachelor’s Degree in Finance
Bachelor’s degree programs can be offered as strictly a finance major, but some schools also combine finance coursework with economics, accounting, general business, or a bachelors in business administration in finance. A four-year bachelor’s degree covers the following topics:
- Financial reporting
- Market analysis
- Securities and investments
- Financial planning
A finance bachelor’s degree is usually the minimum academic requirement for industry certifications, such as the Chartered Financial Analyst and the Certified Financial Planner credentials.
Master’s Degree in Finance
Master’s degree programs in finance come in many flavors–as a targeted Master of Arts (M.A.), Master of Science (M.S.), Master of Management, or Master of Business Administration (MBA) with a finance concentration. MBA finance programs integrate finance topics into a very business-centric curriculum. Some schools also offer dual bachelor’s-master’s programs that let you earn both degrees faster. You could also add a focused graduate certificate program to your master’s program to target your studies in a certain area, such as taxation.
Master’s degrees are often available online, and most schools offer a part-time option to lighten the course load for working students. Additionally, as a graduate student, you’ll usually receive additional support through networking functions, seminars, student clubs, and professional organization alliances. If you’re interested in pursuing professional credentials such as the Certified Financial Planner or Chartered Financial Analyst, you can find master’s programs specifically designed to prepare you for certification exams.
Ph.D. in Finance
Ph.D. programs in finance allow you to specialize in a related field such as economics, corporate finance, business management, or international finance. Regardless of your chosen path, you’ll probably integrate one or more of these specializations into your Ph.D. work. With a Ph.D. in finance, you can either work in the finance industry or pursue a career as a professor.
Online Finance Degree
Online degree programs allow you the flexibility of studying when and where you want. They can also give you the ability to accelerate or extend your program depending on your course load. While some schools offer reduced tuition rates for online learners, others either have no financial difference between online and traditional programs or tack on additional technology fees, so it’s a good idea to check school costs before determining if an online finance degree is right for you.
Finance Degree Requirements
Depending on your interests and career goals, the type of degree you pursue will have its own set of requirements. To enroll in an associate or bachelor’s degree program, you usually only need a high school diploma or equivalent. At the graduate level, your academic requirements could include a bachelor’s degree in a major related to finance (or a master’s degree if you’re going for a doctorate) as well as coursework in certain math or business subjects. You might also need to submit graduate admissions test scores and have some work experience to gain entry to a master’s or doctoral program.
Is a Finance Degree Worth It?
Before deciding to pursue a finance degree, there are a few questions you should ask yourself to help determine your success in the program. Whether you’re pursuing a finance degree for a salary increase, a career transition, or something else, the following information offers a guide to get you thinking about whether a finance degree is right for you.
Is a Finance Degree Hard?
The difficulty of a finance degree program depends on your natural tendencies with mathematical and economic concepts. However, here are a few other considerations you might want to think about:
- Associate degrees in finance aren’t nearly as common as accounting associate degrees, and the curriculum at this level could be limited to one facet of finance, like financial planning, which might also limit your career options.
- A bachelor’s degree in finance makes you more marketable than only having an associate degree, and it qualifies you for professional certifications, which can increase your salary potential.
- Graduate-level education is expensive, and you should consider how the long-term benefits (i.e., salary, job growth, career trajectory, etc.) weigh against the time and money spent on schooling. However, master’s degree programs can offer many flexible benefits, typically offering part-time, online, accelerated, and dual-degree options.
- Doctoral programs in finance require more independent research than the other programs, but if your passion is finance, looking into ways to improve the field might be the main draw for you. Earning a Ph.D. makes you eligible to teach at the university level as well.
What Can You Do with a Finance Degree?
Once you graduate with a finance degree, your career options in finance aren’t limited to banking or investment management. Your degree makes you marketable for positions in human resources, logistics and distribution, insurance, marketing, and commerce. More traditional entry-level jobs include financial clerks and claims adjusters, while more experience or education is required for financial analyst and personal finance advisor roles. With significant experience, you can qualify for advanced jobs in financial management.
Finance Degree vs. Accounting Degree
There is some overlap between finance and accounting curricula, and a degree program usually covers both at the outset. However, the main difference is that accounting programs deal more with current money management, while finance develops strategies for future financial growth. For example, finance degree coursework typically delves into banking, investing, planning, and projections.
Is a Master’s Degree in Finance Worth It?
Just having a master’s degree in finance doesn’t mean you’re a shoe-in for a finance job. According to the Financial Timesin August 2017, the degree was less important to employers than the mastery of certain soft skills–specifically time management, problem-solving, networking, teamwork, and technology skills. However, according to the U.S. Bureau of Labor Statistics, master’s degree holders’ salaries were almost 90% more than those with a bachelor’s degree in the finance and financial services fields.
Matters in personal finance revolve around:
- Protection against unforeseen personal events, as well as events in the wider economies
- Transference of family wealth across generations (bequests and inheritance)
- Effects of tax policies (tax subsidies or penalties) management of personal finances
- Effects of credit on individual financial standing
- Development of a savings plan or financing for large purchases (auto, education, home)
- Planning a secure financial future in an environment of economic instability
- Pursuing a checking and/or a savings account
- Preparation for retirement/ long term expenses
Personal finance may also involve paying for a loan, or debt obligations. The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are:
Financial position: is concerned with understanding the personal resources available by examining net worth and household cash flows. Net worth is a person’s balance sheet, calculated by adding up all assets under that person’s control, minus all liabilities of the household, at one point in time. Household cash flows total up all
from the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished. Ratios are frequently used on the corporate level to measure a companies ability to cover its cost given the assets it has on hand. This can be paralleled to an individual level as well. Maintaining a ratio of 2:1 or greater is seen as healthy in this respect. This means that for every dollar of expenses there is an existing dollar value of assets such as cash to cover that cost.Adequate protection: the analysis of how to protect a household from unforeseen risks. These risks can be divided into the following: liability, property, death, disability, health and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract. Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals, athletes and entertainers require specialized insurance professionals to adequately protect
themselves. Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning.Tax planning: typically the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax. Typically, as one’s income grows, a higher marginal rate of tax must be paid. Understanding how to take advantage of the myriad tax breaks when planning one’s personal finances can make a significant impact in which can later save you money in the long term.Investment and accumulation goals: planning how to accumulate enough money – for large purchases and life events – is what most people consider to be financial planning. Major reasons to accumulate assets include purchasing a house or car, starting a business, paying for education expenses, and saving for retirement. Achieving these goals requires projecting what they will cost, and when you need to withdraw funds that will be necessary to be able to achieve these goals. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which typically will subject the portfolio to a number of risks. Managing these portfolio risks is most often accomplished using asset allocation, which seeks to diversify investment risk and opportunity. This asset allocation will prescribe a percentage allocation to be invested in stocks (either preferred stock or common stock), bonds (for example mutual bonds or government bonds, or corporate bonds), cash and alternative investments. The allocation should also take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person.Retirement planning is the process of understanding how much it costs to live at retirement, and coming up with a plan to distribute assets to meet any income shortfall. Methods for retirement plans include taking advantage of government allowed structures to manage tax liability including: individual (IRA) structures, or employer sponsored retirement plans, annuities and life insurance products. Being that the sources of these articles are Study.com and wikipedia.org, Often times this field of personal finance is overlooked as many individuals see this being something in their distant future. However, it must be noted that the sooner you start investing the greater likelihood you have for actually being prepared. Accrual compounding from the prime “work years” can create a significant impact down the road as these earlier donation years will have more time to compound on themselves giving the individual more wiggle room in their future for unexpected unforeseen events. With every additional year of missed contributions, this creates more
tension on the individual to contribute a greater sum leading up to the maturity date of what they may have always thought would be their retirement age. In the same respect an individual who is able to attain a healthy amount of wealth at a young age may then be able to invest it into a mutual fund or stocks accordingly depending on how much they believe they will need to maintain their standard of living once retirement arrives. Allocating a portfolio according to your goals is crucial and also needs to be continuously adjusted as your personal needs and desires change. Often times, individuals will allocate 80% of their earnings into stocks while there is still room for error (more time away from retirement) with only 20% being distributed to mutual funds as these are considered more ‘steady’ streams of investment. As an individual begins to get closer to their retirement, often times they will gradually adjust these allocations to have a greater percentage in their mutual fund section to solidify their gains and only leave 20% to still generate higher returns. This allocation is commonly recommended by financial planners as it allows the individual to build capital in their work years and keep their gains safe in the long run, leaving less room for volatility.
Estate planning involves planning for the disposition of one’s assets after death. Typically, there is a tax due to the state or federal government at one’s death. Avoiding these taxes means that more of one’s assets will be distributed to one’s heirs. One can leave one’s assets to family, friends or charitable groups.
In corporate finance, a company’s capital structure is the total mix of financing methods it uses to raise funds. One method is debt financing, which includes bank loans and bond sales. Another method is equity financing – the sale of stock by a company to investors, the original shareholders (they own a portion of the business) of a share. Ownership of a share gives the shareholder certain contractual rights and powers, which typically include the right to receive declared dividends and to vote the proxy on important matters (e.g., board elections). The owners of both bonds (either government bonds or corporate bonds) and stock (whether its preferred stock or common stock), may be institutional investors– financial institutions such as investment banks and pension funds or private individuals, called private investors or retail investors.
Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It usually encompasses a long-term strategic perspective regarding investment decisions that affect public entities.[ These long-term strategic periods usually encompass five or more years. Public finance is primarily concerned with:
- Identification of required expenditure of a public sector entity
- Source(s) of that entity’s revenue
- The budgeting process
- Debt issuance (municipal bonds) for public works projects
Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy. Main article: Financial capital
Capital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service. (Capital has two types of sources, equity and debt).
The deployment of capital is decided by the budget. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment.
A budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.
Budgets will include proposed fixed asset requirements and how these expenditures will be financed. Capital budgets are often adjusted annually (done every year) and should be part of a longer-term Capital Improvements Plan.
A cash budget is also required. The working capital requirements of a business are monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.
The cash budget is basically a detailed plan that shows all expected sources and uses of cash when it comes to spending it appropriately. The cash budget has the following six main sections:
- Beginning cash balance – contains the last period’s closing cash balance, in other words, the remaining cash of the last year.
- Cash collections – includes all expected cash receipts (all sources of cash for the period considered, mainly sales)
- Cash disbursements – lists all planned cash outflows for the period such as dividend, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortization, etc.)
- Cash excess or deficiency – a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.
- Financing – discloses the planned borrowings and repayments of those planned borrowings, including interest.
Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to goods and services. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centres on managing risk in the context of the financial markets, and the resultant economic and financial models. It essentially explores how rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. “Financial economics”, at least formally, also considers investment under “certainty” (Fisher separation theorem, “theory of investment value”, Modigliani–Miller theorem) and hence also contributes to corporate finance theory. Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.
Although they are closely related, the disciplines of economics and finance are distinct. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.
Financial mathematics is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory that is involved in financial mathematics. Generally, mathematical finance will derive, and extend, the mathematical or numericalmodels suggested by financial economics. In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Arguably, these are largely synonymous, although the latter focuses on application, while the former focuses on modelling and derivation (see: Quantitative analyst). The field is largely focused on the modelling of derivatives, although other important subfields include insurance mathematics and quantitative portfolio problems. See Outline of finance: Mathematical tools; Outline of finance: Derivatives pricing.