Why finance for A is not always finance for B

Finance like most things can be as simple or as complicated as one chooses to make it. With roots stretching back in history, finance began when things of value began to be equivocated with wealth. However, financial management does not have to be about wealth at all, it also pertains to debt management and the valuation of resources considered essential in day to day life.

How assets and debts are measured, utilized, exchanged and valued also differ considerably from individual to individual and society to society, in part because of an aspect of behavioral finance called behavioral heuristics, but also because of variances among individual and cultural values, and knowledge systems.

Money Transfer from person A to B: Each have different financial goals

Image attribution: Horatius License: Public Domain

Financial measurement is constructed

As with many modernizations, finance is a socially constructed reality that makes use of a selectively chosen deductive knowledge. For example, our numerical system is 'base 10' which according to Kenny Felder of North Carolina University really only means that all numbers larger than 9 are created using the original numbers 0-9. In a base 5 system, all numbers larger than 4 are derived from the numbers 0-4 and 5-9 are not used. Thus, numbers are only the result of meaning we as human allow them to have.

Different financial systems represent the same things

Multiple financial meanings can also be construed from exactly the same phenomenon. To illustrate, a commodity futures contract for the delivery of 5 tons of seal meat  may represent a present value of future cash flow to an investor, but absolutely nothing to a traditional Inuit who's currency consists of seal meat and not a derivative financial instrument. Both realities are the same, i.e. 5 tons of seal meat, but the former creates things based on other things whereas the latter simply deals with what is easily accounted for.

Financial management is linked to cultural values

In addition to the system used to measure things of value, and the extent to which that system derives meaning, finance also has cultural values associated with it. In a post-apocalyptic or purely agrarian culture, non-technological culture with limited products, currency may still exist, but may play a considerably smaller role in civilization. For example, a culture with no factories, automobiles, laboratories etc. is more likely to be indicative of one with less materialistic goals, and consequently, less products and services. Such being the case, finance and economics is less elaborate and are less likely to be a priority in that society.

The goals of finance are not always the same

Another inconsistency in finance is that financial goals are not always the same. Investing for one person may both be a completely different activity and may even serve antithetical purposes. To illustrate, suppose a farmer plants a seed that is intended to grow into an apple tree that will provide fruit for his family and livestock. That seed is an investment and has no affiliation with money because it was traded for a different kind of seed. Yet, another person may invest $100 which itself is a digital concept because it was transferred  through an Automated Clearinghouse, an electronic funds transfer service managed by the Department of the Treasury. Moreover, the goal of that investment is for it to appreciate in value alone.