The basic finance sectors include the public sector and the private sector. The public finance system deals with the public authority. It includes the area of the bank. A private finance system deals with an individual. A financial system is an organization from which we can borrow the amount or invest the amount to get interest. The private finance system includes the area of income, savings, spending, investment, and protection.
Income is the process of getting an amount from the organization or companies for our monthly work. Income is a basic part in our life. Income makes our life smooth. At least one in a family should have an income to lead a basic life. If we want to live a sophisticated life then both the partners in a family should have an income. If we don’t have an income then running our life in this competitive world is very difficult. So, income is necessarily needed for us. Through our income, we can buy anything necessary for us.
Spending is the way we spend our income. There are various ways of spending including buying a monthly grocery, buying a vegetable and the fruits. Spending is also an important aspect in our life. Spending fulfills all our needs. Spending money for our loved ones makes us to feel very happy. Spending money for buying our necessary needs gives us a pleasant feel. If we don’t have a sufficient income then we cannot spend for our partners and parents.
If there is a surplus of money after our spending then we go for savings. Savings make our future brighter and more colorful. Without saving our income, our future cannot exist. Patents save their income for their kids.
Investment means keeping money in any recognized organization to get interest. Investment doubles our savings. The best place to invest our money is the bank. Banks are a safe place where we can invest our money. Banks are legally protected and there is no risk of investing our money. If we want to invest our savings in a bank means first off all we should create an account in that respective bank. Creating an account in the bank is not a difficult task. It includes some simple basic procedures. But some peoples don’t like to keep their amount in the bank. They always keep their amount at the home.
Protecting our money is a very important task. Protecting is the way in which we safeguard our money for unexpected events which may occur in the future. It includes the area of car insurance, home insurance, life insurance, bike insurance, etc… The right place to protect our money is the bank.
What are the different components of the finance system?
The components of the finance system include financial institutions, financial services, finance assets, and financier. These components act as a basic thing for building up a finance system. The development of a nation depends upon the economy of a country.