1. Definition of Finance and Economics
Economics is a social science related to production, consumption, and distribution of goods and services and more prominent topics such as inflation, recession, and supply and demand. The purpose of economics is to explain how the economy behaves and how people interact. There are the sub-branches of micro and macroeconomics within economics: Microeconomics covers individuals’ economic decisions, while macroeconomics covers economy-wide phenomena, such as inflation and recession.
Finance is the study of economics related to the financial markets, or how to manage funds and money. While economics doesn’t necessarily have to deal with money as an exchange but rather barter, finance deals with money in the forms of bonds, stocks, etc. Similar to economics, finance can go as detailed as personal finance, corporate finance, and public finance.
Below is a summary of finance and economic fields from Diffen.com:
Economics is a social science that studies the management of goods and services, including the production and consumption and the factors affecting them.
Finance is the science of managing funds keeping in mind the time, cash at hand and the risk involved.
Macro and microeconomics
Personal finance, corporate finance, and public finance
Profession economists are hired as consultants by private and public sector
Finance is managed by individuals in families or by banks or other institutions
2. Finance and Economics Majors
Regardless of the major you choose, in the beginning of finance and economics majors, you will have to take similar foundation classes such as Introduction to Business Administration, Legal Business 101, or Introduction to Accounting, because both majors fall under the category of Business Administration.
As a finance major, you will explore “how to work with businesses to streamline operations through financial planning, investing, problem-solving, and budgeting.” As mentioned above, there are three different types of finance, leading to a variety of options and career choices available for students after graduation. You can manage individuals’, big corporations or the government’s money.
Compared to finance, economics majors are a bit more complicated to make sense of, depending on which economics route you want to pursue. Being a social science major, there are many science / quantitative as well as social aspects you must learn about. An economics major “examines questions related to resource allocation, incentives and wealth, among others.”
With an economics degree, you can choose to work from a client-side or agency-side, analyzing markets, consumers, and the economy to predict trends. You can also narrow down your options and focus on the micro or macro side of economics.
Even though your advanced coursework for each major is different, both majors will give you essential practical skills for your future career, such as:
- Critical and logical thinking
- Data analysis: quantitative and qualitative
- Detail-oriented and organizational skills
- Communication and persuasion skills
- Simplify and synthesize complex information
With a large amount of personal and behavioral data available, every business will need someone to understand the data and transform the data into critical business information. Therefore, by studying either finance or economics, you will be prepared and ready for any data-related jobs available in the market.
3. Why should you choose to major in Finance and Economics?
From the personal finance side, finance revolves around everyone’s lives, from saving enough money to buy a Nintendo Switch, to investing in a company you believe in by buying their stock. Finance may seem dry, but it’s very emotional, as money has a way of making every decision emotional. You may be willing to pay up to $10K for a vintage Chanel bag, while the price should only be $1-2K. On the corporate finance side, finance focuses on managing money for the company, creating budgets, performing analysis of income and expenses, making projections, and maximizing shareholder value. Studying Finance will prepare you for a career in the financial sector and also help you make informed decisions about your daily life. Another reason for choosing Finance is because of the demand for the job. According to the U.S. Bureau of Labor Statistics, in the next 9-10 years, financial analysts see a 6% growth in demand (Faster than average) with a median salary of $83,660 per year.
If you feel that you are not a big Finance person, you can consider majoring in Economics. While Finance helps you understand how money works, economics enables you to know how the world works. Specifically, economics helps you understand the behavior and decision-making of people and markets. With the analytical and problem-solving skills learned in Economics, you can succeed in various fields and career paths such as law, health, journalism, marketing, etc., – basically anywhere that requires a high level of data analysis like market research or consumer research. Being an Economist after graduation also provides you with a certain and in-demand career. According to the U.S. Bureau of Labor Statistics, in the next 9-10 years, economists will see a 13% growth in demand (faster than average) with a median salary of $108,350 per year. You also have the option to start working right after graduation and work your way up or do advanced degrees. With strong analytical skills, experience using statistical analysis software, and a Master’s or Ph.D. degree, your door to career options will expand significantly.
4. High school preparation for finance and economics majors
Academic-wise, you can prepare early for a finance or economics major through studying mathematics and statistics courses throughout high school. The study of math and statistics will equip you with a foundation in problem-solving and data analysis. You can gradually advance in high school by taking honors, advanced, or AP math and related courses.
Outside of class, there are many ways that you can express your finance and/or economics interests. In your high school, you can participate in clubs and organizations related to the field, such as Business Club, Math Club, Entrepreneurship Club, or any other clubs that provide the chance to participate in business and math competitions.
Besides clubs and organizations, you can also gain experience through internships or externships. You can reach out to your teachers, relatives, or professors for any internships in finance or economics. Even if you are not involved in the decision-making process of financial and economic decisions, you will be exposed to the department and understand the company’s financial process. This internship will also differentiate you from other applicants because you are proactive and determined to gain more knowledge outside of the classroom.
Finance and Economics are similar yet different in many aspects. We hope that you understand the differences between the two areas and find the field that sparks your interest in this article. For students who are interested in economics and want to know how the world work, this online course will help you get started and prepared before registering for the next Economics course in school:
Introduction to Economics
Description: This course will help students to interpret economic news and economic data profoundly. At the same time, students will learn to form their own insights on economic issues. This course will provide a solid foundation for students who wish to study advanced economics in the future.
Class schedule: 10 classes total, 90 minutes each class
Description: Students will use college-level economic theory and models to analyze the financial impact on the global economy. The economic tutor will provide students with the models and tools necessary to write an economic research paper. The economic research project encourages students to integrate their acquired knowledge of economic theory, phenomenon, data, and policy.
Class schedule: 15 classes total, 90 minutes each class