Personal Finance is the science that studies the application of financial concepts in financial decisions a person or family. In personal finance are considered the financial events of each individual as well as their stage of life to assist in financial planning. Studies of financing options, household budgeting, calculation of investment management, current accounts, retirement plans, asset monitoring and tracking expenditures are examples of tasks associated with personal finances.
Objectives
The primary purpose of personal finance is to allow each individual to have a healthy financial life (controlled) in order to overcome times of adversity inherent in everyday life without stress, as well as enabling greater reach other goals such as buying a house, a car or start your own business.
Friday, October 8, 2010
Sunday, September 12, 2010
Public Finances
Fiscal policy is a branch of economic policy that sets the budget, and its components, government spending and taxes as control variables to ensure and maintain economic stability, cushioning the fluctuations of economic cycles and helping to maintain a growing economy, full employment and without high inflation.
Framework
The financial activity of the state plays in modern societies three basic functions, a function of resource allocation, a redistributive function and a stabilizing role. By the mapping function, the State provides goods that, under certain circumstances, the market does not provide adequate due to the existence of so-called market failures. The redistributive role of the state, tries to reconcile the differences that occur between the distribution of wealth that makes the market system and distribution society considers just, that involves ethical, political and economic. The stabilizing function, which is part of fiscal policy, try to get financial system stability and to avoid imbalances and bring the necessary adjustments in aggregate demand in each case to overcome situations of inflation or unemployment.
Objectives end of the fiscal policy
As stated above the main objectives of all fiscal policies are:
- Accelerating economic growth.
- Full occupation of all the productive resources of society, both human and material and capital.
- Full price stability, defined as the general price indices do not suffer significant elevations or reductions.
Thursday, September 2, 2010
Behavioural finance
Behavioral finance and behavioral economics are nearby fields that apply scientific research in cognitive and emotional tendencies and social human for a better understanding of economic decision making and how they affect market prices, returns and the allocation of resources . The fields are primarily concerned with rationality, or lack thereof, of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory. Recently, neuroscience has joined the alliance, allowing to study the neuroanatomical and neurophysiological bases of economic behavior, conforming and the new science of neuroeconomics.
The trials are mostly concerned with the effects of market decisions, but also with public choice, another source of economic decisions with some similar trends.
History
In classical economics, economic theory had a close relationship with psychology. For example, Adam Smith wrote an important text describing psychological principles of individual behavior, The Theory of Moral Sentiments and Jeremy Bentham wrote extensively on the grounds of utility. Economists began to distance themselves from psychology during the development of neoclassical economics as they sought to reshape the discipline as a natural science, with explanations of economic behavior deduced from assumptions about the nature of economic agents. The concept of homo economicus was developed and the psychology of this entity was fundamentally rational. However, psychological explanations continued to inform the analysis of many important figures in the development of neoclassical economics, such as Francis Edgeworth, Vilfredo Pareto, Irving Fisher and John Maynard Keynes.
Psychology had long since disappeared from economic discussions in the middle of the twentieth century. Several factors contributed to the resurgence of its use soon after and the development of behavioral economics. The models of expected utility and discounted utility began to gain wide acceptance, generating testable hypotheses about decision making under uncertainty and intertemporal consumption respectively. A number of observed and repeatable anomalies challenged those hypotheses. In addition, during the 1960s cognitive psychology began to describe the brain as a device information processing (in contrast to behaviorist models). Psychologists who specialize in this field, such as Ward Edwards, Amos Tversky and Daniel Kahneman began to compare their cognitive models of decision making under risk and uncertainty to economic models of rational behavior.
The publication is probably more important in the development of behavioral finance was written by Kahneman and Tversky in 1979. This document, "Prospect theory: Decision Making Under Risk ', used cognitive psychological techniques to explain a number of documented anomalies in rational economic decision making. Other milestones in the development of this field included several popular lectures at the University of Chicago (see Hogarth and Reder, 1987) and in 1997 a special edition of the respected Quarterly Journal of Economics devoted to the topic of behavioral economics.
The trials are mostly concerned with the effects of market decisions, but also with public choice, another source of economic decisions with some similar trends.
History
In classical economics, economic theory had a close relationship with psychology. For example, Adam Smith wrote an important text describing psychological principles of individual behavior, The Theory of Moral Sentiments and Jeremy Bentham wrote extensively on the grounds of utility. Economists began to distance themselves from psychology during the development of neoclassical economics as they sought to reshape the discipline as a natural science, with explanations of economic behavior deduced from assumptions about the nature of economic agents. The concept of homo economicus was developed and the psychology of this entity was fundamentally rational. However, psychological explanations continued to inform the analysis of many important figures in the development of neoclassical economics, such as Francis Edgeworth, Vilfredo Pareto, Irving Fisher and John Maynard Keynes.
Psychology had long since disappeared from economic discussions in the middle of the twentieth century. Several factors contributed to the resurgence of its use soon after and the development of behavioral economics. The models of expected utility and discounted utility began to gain wide acceptance, generating testable hypotheses about decision making under uncertainty and intertemporal consumption respectively. A number of observed and repeatable anomalies challenged those hypotheses. In addition, during the 1960s cognitive psychology began to describe the brain as a device information processing (in contrast to behaviorist models). Psychologists who specialize in this field, such as Ward Edwards, Amos Tversky and Daniel Kahneman began to compare their cognitive models of decision making under risk and uncertainty to economic models of rational behavior.
The publication is probably more important in the development of behavioral finance was written by Kahneman and Tversky in 1979. This document, "Prospect theory: Decision Making Under Risk ', used cognitive psychological techniques to explain a number of documented anomalies in rational economic decision making. Other milestones in the development of this field included several popular lectures at the University of Chicago (see Hogarth and Reder, 1987) and in 1997 a special edition of the respected Quarterly Journal of Economics devoted to the topic of behavioral economics.
Tuesday, June 15, 2010
Finance Word history
The term finance comes from the Latin "finis", which means end or finish. The finances have their origin in the completion of a transaction with the transfer of financial resources (with the money transfer transaction is finished.)
These financial transactions existed since man created the concept of money, but so were already established in the early modern era when he came the first lenders and traders treaties establishing financial mathematics where mentioned issues such as calculating interest or management Financial Statements (History of capitalism)
These financial transactions existed since man created the concept of money, but so were already established in the early modern era when he came the first lenders and traders treaties establishing financial mathematics where mentioned issues such as calculating interest or management Financial Statements (History of capitalism)
Monday, May 10, 2010
What is finance?
Finances are a branch of economics that addresses the issue related to obtaining and managing money, resources or capital by a person or company. Finance refers to how resources are obtained, the way they spend or consume, the way they invest, lose or profitable.
The administration or management of money or capital, today has become a profession in an art by the inherent complexity of an environment that swarm many variables and elements. The techniques and ways to acquire and manage money are becoming more complex, more demanding.
Finance study various aspects and elements related to the whole process of obtaining and managing money or capital. Finance seek to improve the sources from which you get money and seeks to optimize its use, which can result in spending or investment.
That is why the finances are very well distinguished between investment in an asset that retains and even potentiates the money, and just spending it only leads to the disappearance of money. The study of finance is very complex because they are closely related to a host of factors such as microeconomics, macro-economic policy psychology, sociology, culture, and other aspects that are either affect or influence in the decisions that humans in terms of money. That is why in finance is not all laws, rules or parameters are universal, as each society, each population has different elements that influence and modify human behavior against the money.
The administration or management of money or capital, today has become a profession in an art by the inherent complexity of an environment that swarm many variables and elements. The techniques and ways to acquire and manage money are becoming more complex, more demanding.
Finance study various aspects and elements related to the whole process of obtaining and managing money or capital. Finance seek to improve the sources from which you get money and seeks to optimize its use, which can result in spending or investment.
That is why the finances are very well distinguished between investment in an asset that retains and even potentiates the money, and just spending it only leads to the disappearance of money. The study of finance is very complex because they are closely related to a host of factors such as microeconomics, macro-economic policy psychology, sociology, culture, and other aspects that are either affect or influence in the decisions that humans in terms of money. That is why in finance is not all laws, rules or parameters are universal, as each society, each population has different elements that influence and modify human behavior against the money.
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