The activity of finance is the application of a set of techniques that individuals and organizations use to manage their financial affairs, particularly the differences between income and expenditure.

An individual or organization whose income exceeds their expenditure can lend or invest the excess. On the other hand, an individual or organization whose income is less than their expenditure can borrow, decrease their expenses, or increase their income. The lender can find a matching borrower, or can resort to a financial intermediary, such as a bank or the bond market. The lender receives interest, the borrower pays interest, and the financial intermediary pockets the difference.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders of different sizes to coordinate their activity.

Finance is used by individuals (personal finance), by governments, (public finance), by businesses (corporate finance, ect.) as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments, with consideration to their institutional setting.