Finance is a general term referring to those things relating to the study, development, and management of financial assets and liabilities. Specifically, it refers to the questions of what and why a person, business or even government obtain the financial resources necessary – called money in the financial context – and what they use or invest this money on.

The main aspects of finance are interest, income, expenditure, income tax, expenditure, net worth and assets. Each of these has its own contribution to making the world as a whole as a stable, smooth, efficient and safe place to live. These aspects are interlinked and cannot be dealt with separately. If one of them goes down the drain, then the others too will be affected, creating a domino effect that can have severe repercussions.

Interest refers to the principle of paying money to someone once you have borrowed the money. The interest can be variable (based on various factors including the amount borrowed, your credit score and so forth), fixed or negotiable (paid in equal amounts). In some countries, there are specific interest rates and terms applicable to a certain type of finance. Interest also is associated with other financial concepts like the difference between principal and interest. If you pay your principal less than the interest, you can get out of the loan relatively easily, whereas if you pay more interest than the principal you will have to pay a long term loan.

Income is money obtained after the expenditure has been made. It is either paid directly to the person who owes it to you or it can be paid out through wages or salary. The difference between the principal amount and the income is called interest. If you owe money to an individual and they pay the principal less than the interest, you have to pay that amount first. If, however, you pay them more than the principal, then you have to pay the interest. If you have to pay out a large amount of money in one lump sum, you can opt for an unsecured loan and the creditor is not obliged to make up the interest. as well as to give any security against it.

Expenditure refers to what a person, business or organisation does with the finance. The principal is what is needed to carry on business or operate a business; the expense is what they spend on that business; and the profit is the difference between the two. The profit can be seen as a direct or indirect form of income. If the business or organisation is doing well, then the profit is high because the funds they earn go towards paying off the loan. {or the interest and capital cost of the business etc. A business is always in debt and the principal and can only make payments when the debt is paid off. {or the loan is paid off. If they pay the principal less than the interest, they lose money. If they pay more than the interest, they lose money.

Asset is also described as the value of property held by a person or organisation. Property is always available to the owner.