Introduction

In today's world of swiftly changing economic forces, knowing how to manage money is more important than ever. Obtaining your finance degree will improve your chances of employment in a wide range of positions focused around helping individuals, corporations, or public entities control their funds, with the added benefit of knowing how to responsibly handle your own money.

Finance is defined as the management of revenues. As such, it encompasses many concepts, such as saving, lending, budgeting, and investing. It also involves knowledge of financial regulations, financial models and instruments, and accounting standards, as well as an understanding of how time and risk interconnect to influence money. The expertise in these areas provided by a degree can be applied in the general areas of personal finance (helping an individual or family to make important monetary decisions), corporate finance (using analysis and financial tools to maximize the corporate value of a corporation or small business while minimizing its financial risks), and public finance (overseeing the financial activities of public entities such as states, counties, municipalities, or school districts).

One of the most important benefits of a financial degree is the flexibility it confers on your career. A degree can, of course, open the door to careers traditionally associated with money, such as financial analysis, financial consulting, financial management, commercial banking, corporate finance, and investment banking. However, a degree can also lay the foundation for or help you transition into other careers such as insurance and real estate.

The insurance industry, for example, involves helping individuals and businesses anticipate and manage risk by protecting themselves from financial losses. A finance degree offers valuable background knowledge in these areas, so graduates with this degree are in demand for jobs in the insurance industry, such as underwriters, asset managers, sales representatives and customer service representatives. As for real estate, many employers in this industry prefer employees with underlying general financial knowledge. A finance degree can, therefore, pave the way for real estate careers in title insurance, real estate appraisal, real estate development, brokerage and leasing, and property management.

Further training or certification, in addition to your finance degree, is usually recommended in finance and may be required for certain transition careers. For example, becoming a real estate broker requires a regional license. If you want to be an insurance underwriter, you would also need credentials such as an ACU (Associate in Commercial Underwriting) or CPCU (Chartered Property and Casualty Underwriter). In finance careers, you can pursue certifications such as a CFA (Chartered Financial Analyst) or CFP (Certified Financial Planner), depending on the area in which you want to specialize. These certifications can usually be obtained while working full-time in a relevant field.

A bachelor's degree in finance is usually the minimum requirement for most entry-level jobs in the financial sector, such as loan officers, auditors and accountants. From there, experience and/or more advanced degrees such as MBAs (Master of Business Administration) or DBAs (Doctor of Business Administration) can lead to opportunities for advancement. In fact, many employers in the financial industry are increasingly placing more emphasis on advanced degrees. Some employers often prefer and sometimes even require advanced degrees for positions that previously required only a bachelor's degree, such as treasurers, accountants and budget analysts. An advanced degree is almost always a prerequisite, of course, for mid- and senior-level finance positions.

Advantages and Disadvantages

There are advantages and disadvantages to any of the choices we make in life and pursuing a degree can have its share of both.

An obvious disadvantage to acquiring a degree in finance, as with any college degree, is the cost. College tuition and fees have long since surpassed inflation. According to information from the College Board, tuition has increased at about twice the rate of general inflation, at 6% - 9% from 1958 through 2001.

The average cost of a bachelor's degree (not counting room and board) is $25,143 per year at a private college and $6,585 per year at a public college or university, according to the College Board's 2008-2009 reports. Price tags like these, along with the fact that many students interested in a finance career feel they must earn their degree from one of the top-tier schools to be taken seriously, make many students wonder if they would be better off forgoing college and entering the work force right away.

On the other hand, experts estimate that someone with a bachelor's degree can expect to earn more twice what they would with just a high school degree over the course of their lifetime. If a college graduate and a high school graduate both hold the same position, the employee with the bachelor's degree is almost always paid more.

A bachelor's degree is also the very minimum required level of education for most positions in the finance field. Many people would, therefore, argue that a degree will pay for itself over time. When financial aid and educational alternatives, such as two-year associate degrees (average cost: $2,500) or online distance learning colleges are factored in, the total bill for a bachelor's degree can actually be much less than the published prices.

As for the matter of which school finance students should attend, while it is true that graduates of top-tier and Ivy League schools may be courted more aggressively by job recruiters, in the end personal qualities, scholastic achievements, and what you majored in can be more important than which school you attended.

According to a 2009 survey by PayScale, people who hold degrees in quantitative-oriented areas, such as engineering, mathematics, and economics, earned the 20 highest starting and mid-career median salaries. According to this survey, economics majors, for example, had the fifth-highest mid-career median salary, the 17th-highest starting salary, and the highest salary at the 90th percentile mid-career mark. If you combine your finance degree with ambition, industriousness, and persistence, you will most likely find a successful job no matter what school you attended.

Another disadvantage of earning a degree is that many of the jobs available to you can involve a high workload, which leaves little time for a personal life. Also, due to the greater scrutiny of company finances now required by new laws and regulations such as the Sarbanes-Oxley Act of 2002, many finance professionals find themselves doing much time-consuming compliance work that is not related to their actual role.

The advantage of this, of course, is that increased compliance requirements also lead to an increase of jobs in the finance field, especially at regulatory agencies. As for life-work balance, the range of jobs available to those with a financial degree is so wide that both 'live-to-work' and 'work-to-live' types can find a career that is satisfying.

Finance Associations

Professional finance associations are excellent resources for making industry contacts, keeping up on industry issues and news, sharing ideas and research, attaining certifications, and receiving professional education that can update your skills even after you have earned your degree. Following is a list of some of the major financial associations:

• American Accounting Association – The American Accounting Association is a voluntary association of persons interested in accounting education and research. It promotes worldwide excellence in accounting education, research, and practice. Its website provides information about industry issues, meetings, publications, submission of papers to industry journals, job listings, and a social networking platform for members.
  
• American Bankers Association – The American Bankers Association includes members working in banking institutions, community, regional, and money center banks and holding companies, as well as savings associations, trust companies, and savings banks. Its website offers job listings, industry news, conference schedules, and more.
  
• American Council of Life Insurers – The ACLI represents over 350 member companies throughout the United States. ACLI members are providers of financial and retirement products covering both individual and business markets, including life insurance, annuities, pensions, 401(k) and other retirement plans, long-term care and disability income insurance, and reinsurance. Its website offers information on industry issues, news, public policy representation, association conferences, and meetings.
  
• American Finance Association – The AFA is an academic organization devoted to the study and promotion of knowledge about financial economics. It sponsors an annual meeting where the president speaks on a chosen subject and members present papers that cover a variety of financial topics.
  
• Association for Financial Professionals – The AFP serves a network of over 16,000 treasury and finance professionals. It provides members with economic research and data, networking events, financial analytical tools, and public policy representation as well as training and the CTP (Certified Treasury Professional) certification program.
  
• American Institute of Certified Public Accountants – The AICPA establishes professional standards for all CPAs (Certified Public Accountants), assists members in continually improving their performance and expertise, and monitors performance to enforce standards. Its website contains information on industry news, publications, conferences, research, and the CPA certification program.
  
• Certified Financial Planner Board of Standards – This is a regulatory organization that creates and enforces standards of competency, practice, and ethics for financial planners. It grants the CFP (Certified Financial Planner) certification as the recognized standard of excellence for the profession. Besides certification, it also provides education, enforcement of ethics and standards, communication, and professional advocacy.
  
• CFA Institute – This international non-profit organization represents investment professionals from more than 100 countries and awards the CFA (Chartered Financial Analyst) and CIPM (Certificate in Investment Performance Management) certifications. It also offers a range of educational programs and services for members, program candidates, investors, employers, institutions, and the press.
• Financial Management Association International – The FMA promotes the development and understanding of basic and applied research and of sound financial principles; encourages and supports quality financial education; and encourages interaction among those who share an interest in finance. It sponsors an annual conference to present research. Members include academicians, practitioners, and students from around the world. Its website provides information on conferences, meetings, publications, job listings, and awards, as well as a special section that provides school and career help to undergraduate and MBA students.
  
• Insurance Institute of America/American Institute for CPCU - These combined organizations provide a full range of certifications to insurance industry professionals such as the ACU (Associate in Commercial Underwriting), API (Associate in Personal Insurance), CPCU (Chartered Property and Casualty Underwriter), and the new ANFI (Associate in National Flood Insurance).
  

Finance Journals

Finance journals can be useful reading for finance professionals interested in research that is going on in their discipline, as well as for students studying for a financial degree. Many members of the financial academic community also publish papers in these journals to become known in their field. Most universities, colleges, and business schools should carry copies of the most prestigious of these journals. They are also available for subscription and reading over the Internet.

Following is a list of some of the major finance journals:

• Journal of Financial Economics - This is a peer-reviewed academic journal covering the theory of financial economics. It is considered to be among the top three financial journals in the world and is one of those used by the Financial Times to compile its business school research rankings. Its primary emphasis is on high quality analytical, empirical, and clinical contributions to the areas of capital markets, financial institutions, corporate finance, corporate governance, and the economics of organizations. Some of its recent articles include, 'Liquidity and Valuation in an Uncertain World,' 'Short Selling in Initial Public Offerings,' and 'Why Do Firms Appoint CEOs as Outside Directors?'
• Journal of Finance - The official publication of the American Finance Association, this journal is also one of the three most prestigious international financial journals. It reaches over 8,000 academics, finance professionals, libraries, governments, and financial institutions around the world and is one of the most widely cited academic journals of finance, as well as in all of economics. It publishes research among all the major fields of financial study. Samples of its recent articles are, 'Have Individual Stocks Become More Volatile?' , 'How Big Are the Tax Benefits of Debt?' and 'What Makes Investors Trade?'
• The Review of Financial Studies - This journal is the flagship publication of the Society of Financial Studies and rounds out the list of the top three financial journals in the world. It publishes a mixture of theoretical and empirical articles based on quality and importance to the field of finance, such as 'Does Competition Reduce the Risk of Bank Failures?' and 'When Shareholders Are Creditors: Effects of the Simultaneous Holding of Equity and Debt by Non-Commercial Banking Institutions.'



• Journal of Financial and Quantitative Analysis - This journal publishes theoretical and empirical research in financial economics, covering topics such as corporate finance, capital and security markets, investments, and quantitative methods considered particularly relevant to financial researchers. Samples of recent articles include, 'Trading Volume in Dealer Markets' and 'The Economic Role of Jumps and Recovery Rates in the Market for Corporate Default Risk.'
• The Quarterly Journal of Economics - This journal is the oldest professional journal of economics in the English language, beginning publication in 1886. Edited by Harvard University's Department of Economics, it covers all aspects of economic research, including its traditional emphasis on microtheory as well as theoretical and empirical macroeconomics. Recent articles include, 'Sex and Science: How Professor Gender Perpetuates the Gender Gap' and 'Counterparty Risk in Financial Contracts: Should the Insured Worry About the Insurer?'
• The Journal of Political Economy - Also one of the older economic journals in the country (since 1892), this journal publishes studies in areas such as monetary theory, fiscal policy, labor economics, micro- and macroeconomic theory, international trade and finance, and social economics. Some of its recent articles include, 'The Macroeconomic Implications of Rising Wage Inequality in the United States' and 'Explaining the Favorite-Long Shot Bias: Is It Risk-Love or Misperceptions?'
• Financial Analysts Journal - This journal seeks to advance the knowledge and understanding of investment management practice through its research articles, such as the recent 'Opportunities for Patient Investors.'

History of Finance

When Columbus discovered the New World in 1492, he found Native Americans who practiced a very simple economy that involved trading or bartering among themselves with the products of their hunting, fishing, or agriculture. However, most of the basic concepts that now make up our modern system of finance were already in existence in other parts of the world.

For example, Mesopotamia was using silver as currency by 2500 BC, and China was printing paper money by 1107. (China also was the first country to find out that printing too much paper money leads to inflation.) The ancient Assyrians used other forms of paper money, such as bills of exchange and promissory notes, which were a forerunner of our modern checks. Mesopotamia and China used futures contracts, in which commodities such as slaves or rice were sold for future delivery. Our modern futures exchange system is thought to be descended from medieval trade fairs in 12th century Venice. Commodities markets existed in Egypt, Arabia, and India as early as 1200 BC. Options contracts have been traced to the ancient Phoenicians, and an early form of a margin transaction to ancient Greece in 300 BC. Insurance, in the form of suretyships, was first mentioned in the Old Testament and was being used extensively by 3000 BC in Babylonia, where it spread to Phoenicia and was transferred to shipping. The concept of annuities can be traced to the ancient Egyptians, Hindus, and Chinese. An early form of banks existed in Athens by the 5th century.

All of these monetary concepts and others eventually came together in what became the United States of America to form one of the most profitable economies in the world. The United States' financial structure is based on a modified capitalist economic system in which the chief means of production (land, labor, and capital) are privately owned, while its products and services are bought and sold in free and competitive markets. Its economic base is a varied mixture of manufacturing, industry, technology, agriculture, and services.

Most financial transactions in the United States are handled through its banking system, which is regulated by both the federal and state governments. Only about 12% of payments in the U. S. are made with cash; the rest are made by checks drawn against bank deposits. Banks also accept deposits and make loans. A variety of other financial institutions, such as credit unions, insurance companies, and investment banks, can also make capital available for businesses as well as state and local governments and the U. S. Treasury. Stocks and bonds are bought and sold on organized stock exchanges, while many more securities are traded in over-the-counter markets.

Most of these institutions, as mentioned earlier, have been in existence in some form since ancient times. Three central national banks were established in the early years of the United States (in 1782, 1791, and 1816), but they all ultimately closed down due to the success of the many state banks that proliferated. Today, there are approximately 8,000 commercial banks that are insured by the Federal Deposit Insurance Corporation (FDIC). The first stock exchange in the United States was formed in 1792 when 24 supply brokers signed an agreement to trade securities on a commission basis outside 68 Wall Street in New York. This gathering re-named itself the New York Stock & Exchange Board in 1817.

Since finance involves many complicated issues, it is not immune to problems, such as inflation (a rise in prices coupled with a decrease in the purchasing power of money, caused by too much money in circulation), recession (an overall decline in the economy caused by a drop in spending, usually lasting about six months to a year), and depression (a more long-term, extreme form of recession).

Inflation has usually occurred in the United States in 15 – 20 year cycles, beginning in colonial times when each colony printed too much of its own currency in order to fund the Revolutionary War. The United States has also experienced several periods of depression, such as the five years following the Panic of 1837 and the Long Depression of 1873 – 96, but its worst was the worldwide Great Depression of the 1930s, which began in the United States after the collapse of its stock exchange in the Wall Street Crash of 1929. As for recessions, the United States is currently emerging from the Great Recession of 2008-2009 which, like the Panic of 1837, was sparked by speculative fever during a real estate bubble.

With an estimated five million people employed in it and more than 500 educational institutions in America educating students in business management or finance programs, the finance industry in the U. S. will hopefully emerge from the current crisis even stronger.