Personal Financial Management is essential as it provides guidelines for better management of personal debt, personal expenses and afterwards help in the calculation of an individual's net financial worth. Public finance management deals with the expenditures and the governmental revenues. The term Public Financial Management allows a combination of the perspectives of financial managers, procurement specialists and economists.
It may be said that Government finance is known as Public Sector Finance and it deals with the allocation of resources according to the budget. A public sector organization does not emphasize on profit maximization but it focuses on public welfare as well. It is generally noticed that expenses of the government exceeds the total revenue. So, it becomes clear that budget deficit is a common issue in case of government entities. Budget is a major issue associated with public finance. Public debts are usually marketable securities issued by the government as bonds. These governmental securities make specified payments at particular time. Public sector organizations can issue bonds and these bonds may give tax exemption to its holders. The main sources of governmental revenues are different types of taxes like income tax, sales tax etc.
Expense sheet is an essential tool used for both public and personal financial management. Expense sheets are highly essential for public finance management, with the help of expense sheet it is possible to calculate the expenses and the income level also can be calculated. Another vital aspect of personal financial management is debt management. As public finance deals with different types of debt management, foremost it is necessary to develop a clear overview about public finance management.
Public policy and Public finance are much related issues because when the decisions associated to finance of a state are addressed by the government, the entire decisions should be framed considering the public policies.
Public Policies associated to public finance can be segregated as:
Fiscal Policy
It is concerned with the entire governmental policies and after considering avenues of government earning, government spending, government borrowings, etc. fiscal policies are designed.
Monetary Policy
It is policy of the central government about the amount of money, interest rate etc that needs to be managed, it is also known as monetary policy. It is now more or less accepted that monetary policy plays an essential role in controlling inflation.