What Is Finance Management? (2024)

Written by Coursera Staff • Updated on

Finance management merges management and accounting, using the financial management cycle to create strategic plans for clients. Learn about this growing field, the education requirements, and different career paths.

What Is Finance Management? (1)

Finance management is the strategic planning and managing of an individual or organization’s finances to better align their financial status to their goals and objectives. Depending on the size of a company, finance management seeks to optimize shareholder value, generate profit, mitigate risk, and safeguard the company's financial health in the short and long term. When working with individuals, finance management may entail planning for retirement, college savings, and other personal investments.

Purpose of financial management

The purpose of financial management is to guide businesses or individuals on financial decisions that affect financial stability both now and in the future. To provide good guidance, financial management professionals will analyze finances and investments along with many other forms of financial data to help clients make decisions that align with goals.

Financial management can also offer clients increased financial stability and profitability when there’s a strategic plan for where, why, and how finances are allocated and used. How financial management professionals help clients reach goals will depend on whether the client is a company or an individual.

Types of financial management

Finance management professionals handle three main types of financial management for companies. These types involve various aspects of the internal decisions a company will likely need to make about cash flow, profits, investments, and holding debt. Many of these decisions will depend significantly on factors like company size, industry, and financial goals. Financial management professionals help companies reach financial goals by guiding in these areas of financing, investment, and dividends.


Financial management professionals assist companies in major decisions that involve acquiring funds, managing debt, and assessing risk when borrowing money for purchases or to build the company. Financing is also required when raising capital. Companies can make better, more strategic financing decisions to raise capital or obtain funds when they have information on cash flow, market trends, and other financial stats on the health of a company.


Financial management professionals can help companies choose where to invest, what to invest in, and how to invest. The financial professional’s job is to determine the number of assets (both fixed and long term) a company will need to hold and where cash flow goes based on current working capital. In essence, this type of financial management is about assessing assets for risk and return ratios. Financial managers will consider a company’s profits, rate of return, cash flow, and other criteria to assist companies in making investment decisions.


Companies should have a dividend disbursement plan and policy in place, with guidance from a financial management professional who can create and implement that plan, suggest modifications when needed, and monitor payouts if and when they occur. Any time a financial decision is made, it’s essential to consider dividend payments since you may hold dividends to fund certain financial decisions within the company.

It’s also important to have a flexible long-term plan that can grow with the company. Some more mature companies may pay out dividends at certain times or once a year; the payout schedule depends on many factors. Other companies may retain or reinvest dividend payments back into the company if the company is in a growth phase.

What is the financial management cycle?

The financial management cycle is a financial planning process critical to a company's growth and development. It includes:

  • Planning and budgeting

  • Resource allocation

  • Operations and monitoring

  • Evaluation and reporting

Effective financial management aligned with an organization’s goals and objectives can lead to greater efficiency and stability. These parts of the financial management cycle must work together to be the most effective.

1. Planning and budgeting

During this analytical phase in the financial management cycle, a company uses past and current financial data to set financial targets, modify objectives, and make changes to the current budget. This phase will typically involve detailed planning as well as a big picture one, meaning a company will look at day-to-day operations, long-term financial plans, and try to link financial targets to these activities.

The goal is to create a strategic financial plan for the company that aligns with objectives for the next three to five years. When setting specific budgets, a company may budget for one fiscal year at a time. A big reason for this is that a budget involves many moving parts that are subject to change by market fluctuations.

2. Resource allocation

Financial managers assign value to capital resources ( anything a company uses to manufacture/produce goods/services) and offer advice on allocating these resources based on criteria like projected company growth and financial goals. Resource allocation is important because it allows a company to have a long-term financial plan focused on its business objectives. Financial management professionals help companies by providing a framework for using capital resources and creating a portfolio that will generate the most revenue, given the company's financial status.

3. Operations and monitoring

This phase is critical to protect against fraudulent activity, errors, compliance issues, or other variances in the allocation of funds, etc. Financial management professionals should run regular financial reviews of business operations and cash flow. These periodic reviews can help mitigate fraud and identify other issues. It is a preventative step that ensures the continuity of business operations by securing the validity and accuracy of a company's financial processes.

4. Evaluation and reporting

Financial management professionals should evaluate a company’s current financial management system and propose changes when necessary. Financial reports and financial data can be helpful when assessing the efficiency and success of an existing system.

Some criteria a financial management professional may consider when evaluating a financial management system include security, compliance, company data needs, and level of support needed. These criteria vary by the company’s size, industry, current financial situation, and long-term goals.

Financial management professionals should be able to offer research-based suggestions that can help a company securely store and manage financial data in compliance with relevant laws and harness that data when needed.

How to work in finance management

To work in finance management, you’ll need a bachelor’s degree in business, economics, finance, or a related field. While there's no mandatory licensure for careers in financial management, certification is highly recommended. In many cases, employers like to see at least five years of professional experience before hiring into a financial management position. Typical jobs that individuals may pursue as an entry point to finance management may include loan officer, junior tax accountant, personal finance advisor, or accountant.

Educational requirements

A bachelor’s degree in finance, business management, or a related field is the minimum requirement to work in finance management. A master’s degree may be required for senior-level positions. Typical coursework for bachelor’s degree programs in finance or business management may include accounting, economics, finance, and human resources. Many master's programs will offer internships, along with some bachelor’s programs. Internships are highly recommended.

Read more: What Can You Do with a Finance Degree? 7 Career Paths


Certification is optional but suggested if you plan on a long-term career in finance management. Professional trade organizations typically offer certification. The type of certification you earn can be specialized to your job title or role. Common certifications that financial management professionals hold include:

  • Certified Management Account (CMA) certification is offered by the Institute of Management Accountants (IMA) and is ideal for anyone wanting to work in financial management. Requirements include at least two years of professional experience and a bachelor’s degree.

  • Chartered Financial Analyst (CFA) certification offered by the CFA institute focuses on investment analysis. This certification is for financial management professionals who want to work in senior-level positions like CFO. Educational and experiential requirements are also necessary to enroll in the CFA program.

  • Certified Government Financial Manager (CGFM) certification offered by the Association of Government Accountants (AGA) is for professionals who work in government financial management specifically. You’ll need at least two years of professional experience in government financial management to earn certification.

  • Certified Treasury Professional (CTP) certification offered by the Association of Financial Professionals (AFP) can benefit anyone who wants to work in corporate treasury. This certification focuses on risk management, corporate liquidity, and ethics. You'll need to meet educational and experiential requirements for this certification, with several options available for admittance into the CTP program.


Careers in finance management require a mix of financial skills and business skills. It’s essential to understand business operations, but proficiency in accounting, financial, and data analytics is equally important. Finance management merges management and finance. You may find success working in the field of finance management if you hold these skills:

Workplace skills

  • Good communication

  • Problem-solving skills

  • Organized

  • Quality leader

  • Proficiency in public speaking and presentation

  • Ability to manage a group of people

  • Detail-oriented

  • Analytical skills

  • Strong decision-making skills

  • Ethical

Technical skills

  • Basic and advanced math skills (algebra, statistics, basic computing)

  • Computer skills

  • Proficiency in financial management systems

  • Understanding of statistical modeling software and spreadsheets

  • Industry-specific knowledge

  • Proficiency in accounting principles and techniques

  • Understanding investment principles


Professional experience in finance or business management is key if you want to advance into upper-level finance management positions. Expect to work at least five years in an entry to mid-level finance position before being eligible to work in finance management. Remember, finance management careers are managerial positions, so requirements like experience and education matter. It’s not just the quantity of experience but also the quality that matters. Try to find jobs in finance or accounting. It’s also helpful to find jobs that can help you move into the specific industry that you want to work in.

Careers in finance management

The scope of careers in the finance management field is vast. From entry-level positions in bookkeeping to management positions like a financial manager or management accountant, you’ll have many career pathway choices.

The career you choose will depend on factors like education, certifications, professional experience, industry, employer, and location. Salaries among finance management jobs will also differ based on these factors. Individuals in senior-level positions like CFO and vice president of financial planning and analysis will be among the top-tier earners in finance management.

*All annual salary data is sourced from Glassdoor as of August 2022

Financial manager

Average annual salary (US): $133,190

Job outlook (2020 to 2030): +17% [1]

Financial managers oversee a financial department and may assist in creating strategic financial plans for an organization. Their duties include preparing financial reports and statements, forecasting, setting budgets, analyzing financial markets for trends and investment opportunities for an organization, and seeking ways to mitigate costs.

Financial advisor

Average annual salary (US): $106,012

Job outlook (2020 to 2030): +5% [2]

Personal financial advisors assist individuals in planning for their future by helping them manage money and seek out investments based on individual situations. A personal financial advisor meets with individuals to set financial goals with short and long-term plans to achieve those objectives. Some financial aspects an advisor may handle include taxes, retirement, college savings, insurance, estate planning, and more. Financial advisors may work for an investment firm or on their own.

Financial analyst

Average annual salary (US): $93,605

Job outlook (2020 to 2030): +6% [3]

Financial analysts may work within a large corporation or with individuals. Their job is to analyze their client’s financial situation and make financial suggestions based on goals and financial status. A financial suggestion may include finding investment opportunities. The goal of an analyst is to evaluate market trends and position a client in a secure financial standing based on the analysis of trends and related data.

Management accountant

Average annual salary (US): $106,058 [4]

Management accountants work for corporations or government agencies. Their goal is to provide an in-depth financial analysis of an organization’s internal financial processes for strategic financial decision-making. Key decision makers in an organization use the information gathered by management accountants to aid in decision-making in the long and short term.

Next steps

Take the next steps in pursuing a career in finance management. You can prepare yourself for a career in finance management today by working on key skills you’ll need in this field. One way to take the next steps toward a finance management job is to enroll in a finance management course like Investment and Portfolio Management Specialization or Investment Management Specialization offered on Coursera. These courses are specially designed for professionals in finance management who want to build their resume, skills, and prospects for employment.

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  • Is an MBA Worth It? Guide

Article sources

1. US Bureau of Labor Statistics, "Financial Managers , https://www.bls.gov/ooh/management/financial-managers.htm." Accessed May 24, 2022.

2. US Bureau of Labor Statistics, "Personal Financial Advisors, https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm#tab-1." Accessed May 24, 2022

3. US Bureau of Labor Statistics, "Financial Analysts, https://www.bls.gov/ooh/business-and-financial/financial-analysts.htm." Accessed May 24, 2022.

4. Glassdoor, "Management Accountant Salary, https://www.glassdoor.com/Salaries/atlanta-management-accountant-salary-SRCH_IL.0,7_IM52_KO8,29.htm." Accessed May 24, 2022.

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This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.

As an enthusiast and expert in finance management, I've delved deep into the intricacies of financial planning, budgeting, resource allocation, and operations evaluation. My hands-on experience and extensive knowledge in the field allow me to provide insights into the concepts presented in the article titled "What Is Finance Management?" written by Coursera Staff, last updated on Nov 29, 2023.

The article comprehensively covers the domain of finance management, addressing various aspects such as its purpose, types, the financial management cycle, and the skills and qualifications required for a career in this field. Let's break down the key concepts used in the article:

  1. Purpose of Financial Management:

    • The purpose is to guide businesses or individuals on financial decisions affecting stability now and in the future.
    • Financial management professionals analyze finances and investments to align decisions with goals.
    • It aims to provide guidance for increased financial stability and profitability through strategic financial plans.
  2. Types of Financial Management:

    • Financial: Involves major decisions on acquiring funds, managing debt, and assessing risk for companies.
    • Investment: Helps companies choose where and how to invest based on risk and return ratios.
    • Dividend: Involves creating and implementing a dividend disbursement plan for companies.
  3. Financial Management Cycle:

    • Planning and Budgeting: Involves using past and current financial data to set targets, modify objectives, and create a strategic financial plan.
    • Resource Allocation: Focuses on assigning value to capital resources and advising on their allocation based on growth and financial goals.
    • Operations and Monitoring: Critical for preventing fraud, errors, and compliance issues through regular financial reviews.
    • Evaluation and Reporting: Financial management professionals evaluate and propose changes to a company's financial management system.
  4. How to Work in Finance Management:

    • A bachelor's degree in business, economics, finance, or a related field is necessary.
    • Certification is optional but highly recommended.
    • Common certifications include Certified Management Accountant (CMA), Chartered Financial Analyst (CFA), Certified Government Financial Manager (CGFM), and Certified Treasury Professional (CTP).
  5. Skills Required:

    • A mix of financial and business skills is crucial.
    • Workplace skills include communication, problem-solving, organization, leadership, and analytical skills.
    • Technical skills involve math, computer proficiency, and knowledge of financial management systems.
  6. Educational Requirements:

    • A bachelor's degree in finance, business management, or a related field is the minimum requirement.
    • A master's degree may be required for senior-level positions.
  7. Certifications:

    • Certifications such as CMA, CFA, CGFM, and CTP are beneficial for career advancement in finance management.
  8. Careers in Finance Management:

    • Job roles include financial manager, financial advisor, financial analyst, and management accountant.
    • Salaries vary based on factors like education, certifications, experience, industry, and location.

The article concludes with next steps for pursuing a career in finance management, emphasizing the importance of building skills and considering relevant courses like those offered on Coursera.

In summary, finance management is a multifaceted discipline that requires a blend of financial acumen, business skills, and strategic thinking to guide individuals or organizations toward their financial goals. The comprehensive coverage in the article aligns with my expertise in the field of finance management.

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