Our Everyday Lives

Each day from the time we get up from our comfy beds to the time we go to sleep, we rely on the financial system, knowingly or unknowingly. Think about your daily routine as well as longer term plans. How do you pay for expenses if you can't immediately afford the upfront price? If you are a student, how are interest rates of your student loans determined? More generally, are there ways to grow our wealth other than earning an hourly wage or annual salary?

Personal Finances

Our first question might be, "How are my personal finances impacted?" Knowing how the system works goes a long way to help us understand exactly what we are doing when we make important decisions. Instead of just accepting the numbers given to us when we apply for a loan, mortgage, or deposit money in a savings account, we ought to think - where do these numbers come from? Can I do better? Is the return I am getting reasonable?

Debt can come in many forms. One can borrow using loans, credit cards, and payment plans.
Types of loans: student loans, mortgages, personal loans, etc.
Understanding finance can help you determine which of these is your best option and whether the options presented are reasonable.

We can invest our earnings into different asset classes: cash, stocks, bonds, real estate, etc.
Each individual's mix of assets depends on various factors such as risk tolerance, financial stability, and age.
Setting up a balanced portfolio helps us generate passive income in addition to our regular income.
Unfortunately, many do not take advantage of passive income, whether it is due to a lack of money to invest, or a lack of awareness of the choices out there.

Our Country

Just as we depend on the financial industry for our personal matters, our nation's activities at the federal, state, and local levels are also intricately linked with the financial system. The government, corporations, and the consumer are codependent participants in the economic machine that drives growth and innovation.

Government at the federal, state, and local levels raises money by taxing and issuing bonds.
Investors in these bonds can be corporations, funds, or individual investors.

The World

The financial transactions of countries might seem like an abstract idea, but they operate largely through similar mechanisms to what we are familiar with, such as taking out loans from each other or from banks. Investments may come from a variety of sources:

Government - US lending to Europe in the aftermath of World War II.
Corporations - J.P. Morgan lending to Great Britain during World War I.
Individuals - foreign citizens who purchase shares of American companies.

The Future

How will the financial industry shape the future, and how will the future shape the financial industry? Both are fascinating questions that will demand attention throughout the course of our lessons.

In a changing climate and energy landscape, sustainable, renewable energy is vital to keeping our planet clean and habitable.
However, the only way we can get to such a happy place is if we invest in these industries.

One defining company that has paved the way as an investment in the future is Tesla.
Despite financial difficulties for many years, the idea of the electric vehicle has been attractive enough for investors to stay on board.

Finance powers the way forward to the future through investment in innovation.
However, innovation itself shapes the way financial transactions are handled all over the world.

Review

Here, we will review the role the financial industry plays in our society. We have not covered everything that will be listed, but just keep in mind that you have this broad summary as a reference for the future.

Distributes capital/funds from those who have it to those who need it.

Lending
M&A Services
Credit to Consumers

Supports the role of money and transactions in your everyday life
Keeps markets efficient (reliable prices)
Invests in ideas and companies to grow the economy