Public finance is part of the field of economics, and primarily concerned with activities that involve the government and how it allocates resources and spends money. A narrower term for this type of financial study would be government finance, with the broader term being public economics. How resources are acquired and used, and how stable the economy is on a macroeconomic level are all important to people who study public finance. This branch of economics focuses more on the proper role of a government in society. The theory is that government would not be needed if private enterprise allocated everything to everyone fairly.
That does not happen, so government is needed to ensure that people who have no money are able to get basic services such as food and medical care. This is done by taxing everyone so the money collected can be distributed through government programs for needy people. People who have very little end up paying very little tax, and people who have more pay more. Another way the government handles public finance is through borrowing money, thus providing more money for it to spend. Government bonds are one of the ways the ruling body creates something of value to borrow against.
When people focus on their personal finance goals by buying government bonds, the money they pay to acquire them is, in essence, a loan to the government. The government then uses that money, along with tax collections and other revenue streams, to finance specific projects and operate programs designed to help people and businesses that are struggling. Public finance also seeks to hold the government accountable for the way it collects money and how it chooses to spend it once it is collected. The way a governmental entity handles its money is generally very complicated, and it often results in some sectors of the public being upset about practices that appear to be highly inefficient.
Unlike corporate finance, which is relatively cut-and-dried in the way money is handled, public finance involves a redistribution of income that is dealt with far differently in some countries than it is in others. The United States, for example, does not have in place some of the larger social programs, such as public health care, that many European nations do. This prompts both positive and negative reactions from the general public and can lead some people to feel insecure and question how their tax dollars are actually being spent.
