Accounting vs. Finance: What's the Difference?

While accounting and finance may go together, there are key differences. Accounting focuses the flow of money in and out of a company or family, while finance is a more broad term that describes how one manages asset and liabilities. Whether you are considering a career in either field or thinking about who to hire to help you manage your own finances, it is important to understand these two areas are and what specialists in each do. To find someone to help with your own money, consider using SmartAsset’s free financial advisor matching tool.

Finance vs. Accounting: The Basics

The difference between finance and accounting is that accounting focuses on the day-to-day flow of money in and out of a company or institution, whereas finance is a broader term for the management of assets and liabilities and the planning of future growth.

If you want to exercise high-level control over a company’s strategy, finance could be for you. If you want to take a specific look at a company’s books, you’re probably more into accounting. It’s often said that accounting looks back to a company’s past financial transactions, whereas finance looks forward to plan future acquisition of assets.

Should you want to study accounting you can expect to take classes in accounting practices and accounting ethics, business law, tax law and accounting theory. If you study finance, you’ll likely spend some time on macroeconomics and international finance in your classes, as well as on financial engineering and corporate finance.

Finance vs. Accounting: Career Options

The Difference Between Accounting and Finance

The difference between finance and accounting may just be a matter of idle curiosity for some of us, but if you’re choosing a college major or a career, it’s an important distinction. Particularly if you’re planning to take on student loans, you probably want to be sure that you’re choosing the path that’s best suited for you.

If you end up working in accounting for a large company you’ll likely report to the company’s chief financial officer. You could have a job title like controller, tax manager, fund accountant, valuation analyst or financial reporting accountant. Alternatively, you could become a tax accountant, a bookkeeper, treasurer or auditor, for yourself, a business, a nonprofit organization or the government.

As an accounting professional you’ll be tracking and reporting flows of money and ensuring compliance with best practices. You’ll rely on Generally Accepted Accounting Principles (GAAP) and you’ll likely come to be familiar with the tax code, too. Section 446 of the Internal Revenue Code will be your friend. That’s the section of the tax code that covers “General rules for methods of accounting.”

If you choose to work in finance, you have a different range of options. You could become a financial analyst, investment banker, financial examiner, personal financial advisor or money manager. You could work in consulting or corporate finance. Banking and insurance underwriting are also open to finance majors. And of course entrepreneurship is another route that’s open to those interested in finance.

Can You Be an Accountant With a Finance Degree?

You can certainly become an accountant with a finance degree, but it may require additional steps. A finance degree provides a strong foundation in financial analysis, investment and management, which overlaps with many accounting concepts. However, accounting also requires specialized knowledge in areas like taxation, auditing and financial reporting.

To pursue a career in accounting with a finance degree, you might need to take additional accounting courses or obtain certifications, such as becoming a Certified Public Accountant (CPA). Many finance graduates find that their background is useful in accounting roles, especially in corporate finance or financial analysis positions.

Finance vs. Accounting: Salaries

There’s a wide salary range in the fields of both finance and accounting. Both fields have strong growth prospects between now and 2024, as projected by the Bureau of Labor Statistics (BLS). Let’s take a look at a few examples of salaries and growth prospects.

According to the BLS, the median pay for a financial analyst in 2023 was just under $100,000 per year at $48 per hour. Between 2023 and 2033, the number of financial analyst jobs is projected to grow by 9%, a faster-than-average growth rate.

Accountants and Auditors have a median pay of just under $80,000 per year or $38 per hour. The BLS projects that the number of accountant and auditor jobs is projected to increase by 6% between 2023 and 2033, which is also an above-average growth rate.

Let’s take a look at an example on the lower end of the scale. According to the BLS, the median pay for bookkeeping, accounting and auditing clerks in 2023 was $47,440 per year or $22.81 per hour. The number of these jobs is projected to decline by 5% between 2023 and 2033. As you can see, the field of accounting has both high-salary, high-growth jobs and lower-salary, negative-growth jobs.

Salaries in finance tend to be high, but there are exceptions. Fundraising professionals are an example. The median pay for fundraisers is $64,160 per year or $30.85 per hour. However, the job outlook is for 6% growth between 2023 and 2033, still above average.

Bottom Line

If you work in accounting your recording and reporting of financial transactions will support the work of the finance team. Likewise, if you’re in finance you’re depending on the clear and accurate work of the folks in accounting. Both fields require a high level of skill, education and comfort with quantitative analysis. Additionally, both have the potential to provide challenging work with good compensation.

Tips for Accounting and Finances

If neither finance nor accounting is up your alley, you might consider finding a financial advisor to help you with your money. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
One basic aspect of finance you can do yourself is make a budget. Use SmartAsset’s budget calculator to get a start on yours!