There are plenty of reasons you might want to study finance, whether it’s because you see yourself as an investment banker or want to go into the accounting side of business administration.
However, before you decide on what type of finance degree to pursue and which program will best prepare you, it’s important that you consider several key factors first.
Here are 5 things you need to know before studying finance.
5 things you need to know before you study finance
1) You need to be good at math
You need to be good at math and although there are many other careers in the field that don’t require it. You do, however, need a deep understanding of how money and accounting work.
Your classes will cover topics like investments, pensions, and banking – though you may want to double check your specific course requirements with your school beforehand.
The study of finance requires mathematics. In order to understand concepts like the time value of money and cash flows, math knowledge is necessary.
While those without experience may find advanced mathematics intimidating, taking introductory classes early on in your studies should give you a better understanding of what’s required later on down the road.
Understanding basic accounting principles will also come in handy: Accounting has become an integral part of financial analysis because so much information comes out through companies’ profit-and-loss statements.
Plus, there’s an increased demand for those with these skills and they’re likely to earn more than average.
The Bureau of Labor Statistics predicts that employment opportunities will increase by 15% between 2014-2024.
So if you’re looking for a career in this area then now is definitely the time!
Specifically, you’ll need a bachelor’s degree from an accredited university in order to find any meaningful job.
If you already have one or intend on getting one in this area, it could be well worth your time to consider pursuing higher education as not only will you have excellent job prospects but also generally better pay rates.
2) You need to be good at critical thinking
One of the most important skills for a finance major is being able to think critically.
This is because there are many different approaches that can be taken when analyzing a problem and someone with strong critical thinking skills will be able to choose the best one.
Knowing how to assess risk, identify potential problems, and develop solutions are all elements of critical thinking that will help any student in the field of finance.
If you’re not good at math: Mathematics is an essential part of financial analysis and understanding complex mathematical models.
Finance majors who aren’t good at math might find it difficult to succeed if they don’t take remedial courses or get extra help from tutors or professors.
It’s also recommended that those interested in pursuing careers as financial analysts take accounting courses to provide them with a more diverse skill set.
3) The finance industry is constantly changing
The finance industry is constantly changing, with new products and services being introduced all the time.
This means that there’s always something new for students to learn, which can be both exciting and overwhelming.
With so many different areas of study in the field, it’s difficult to decide where to start when it comes time to select a major or concentration.
To help make your decision-making process a little easier, we’ve compiled some of the key features of each area of study below.
For starters, it’s important to note that not all majors have the same requirements: Some are more math heavy than others.
But whether you’re interested in becoming a financial analyst, trader, banker, financial advisor, economist or businessperson – there are great programs out there waiting for you!
4) You need to be comfortable with risk
Be able to handle the math. Be able to understand the importance of accounting and how it impacts your business’ finances.
Be aware that college isn’t for everyone and not every major is useful for everyone.
It’s important to remember this and be open minded about other options as well.
The key is finding something you love doing and then try to find a career in that field no matter what it takes.
5) There are many different types of jobs in finance
There are many different types of jobs in finance. Some common ones are: investment banking, corporate finance, equity research, credit analysis, and wealth management.
Investment bankers help companies raise capital by raising money through bond or equity sales.
Corporate financiers advise corporations on mergers and acquisitions or go out into the marketplace to search for a merger partner.
Equity researchers study stocks and follow the performance of a company or sector of companies.
Credit analysts examine a company’s financial statements and use that information to make decisions about whether to lend that company money.
Wealth managers manage the investments of high net worth individuals who have more than $1 million in assets.
They can also provide advice to their clients about taxes, insurance, retirement planning, and other topics.
Stockbrokers work with customers who want to buy or sell securities like stocks or bonds from a particular company. They usually specialize in one type of security (e.g., equities) but can work with all types if they choose.
Brokers typically operate independently as an independent contractor for various brokerage firms but may be employees at larger firms.