The Difference Between Accounting and Finance Degrees

Accounting and finance are two sides of the same coin. Accounting tracks, records, and organizes financial information, while finance manages and manipulates money.

To put it simply, accounting analyzes the past, and finance analyzes the future. Accounting is reactive, and finance is predictive.

Each field plays an important role in an organization or individual’s efforts to manage their assets well. Accounting reveals what you have to work with and lets you explore the real impact of past decisions, while finance helps you decide what to do with what you have, so you can choose the wisest way to utilize your assets.

That’s the at-a-glance difference. But you may find that the closer you look at actual degree programs in these two fields, the blurrier that difference becomes. We’ll talk more about that later, but first, let’s take an in-depth look at what sets these two fields apart, and how the degree you choose could affect your career.

Overview of a finance degree

Finance teaches you how to use money to make more money, and gives you the tools to make realistic forecasts of how a given decision will impact your assets. Since the world of finance is predictive, some aspects of it are uncertain. To do well in finance, you have to know how to calculate risk and weigh potential gains against potential losses.

Like all business degrees, a finance degree gives you a strong background in other business-related fields. This helps you apply your education in finance to the major departments and teams within an organization.

Here’s what makes a finance degree different than accounting:

Courses you’ll take in finance but not accounting

There’s a lot of overlap in the curriculum you’ll see in many accounting and finance degree programs. They share more in common with each other than they do with other business degrees—so much so that some schools blend them into one program. Finance degrees are bound to include some basic accounting classes. Still, a finance program should offer plenty of courses you won’t find in an accounting program.

You might take courses on subjects like:

  • Behavioral finance
  • Corporate finance
  • International finance
  • Real estate finance
  • Private equity
  • Venture capital
  • Asset markets
  • Portfolio management
  • Investment strategy
  • Financial derivatives
  • Financial reporting
  • Continuous-time financing
  • Financial modeling

Careers in finance

Finance and accounting are versatile degrees that can make you a valuable employee in a wide range of positions. But with a degree in finance, you’re especially suited to a unique suite of financial service careers that organizations depend on. Most of these jobs lean on your strategic expertise and forecasting capabilities to help organizations and individuals reach specific financial goals.

Here are just a few of these jobs (median salaries and projected job growth come from the Bureau of Labor Statistics):

Financial analyst

Median salary: $81,760 per year

Projected job growth: 12%

If you want to master the stock market, this is the job for you. Financial analysts generally work for banks, investment firms, investment banks, or insurance companies. Drawing from their background in risk management and investments, financial analysts research stocks, analyze investments, and make recommendations based on the latest information.

In this high-stakes, high-reward environment, financial analysts need to constantly keep up with what’s happening in the business world. You need to produce quality research quickly, and you need to make wise decisions under pressure.

Personal financial advisor

Median salary: $90,530 per year

Projected job growth: 30%

As a personal financial advisor, people turn to you for help with their finances. Using a holistic approach, you evaluate each client’s assets, liabilities, income, and goals to point them towards ideal investment opportunities.

This highly adaptive role lets you work on a commission or fee basis, or a combination of the two. The projected job growth is nearly five times higher than the national average. The stronger the economy gets, the more people are going to need help making wise investment choices.

In addition to a bachelor’s degree, you may need additional licenses from the Securities and Exchange Commission.

Financial manager

Median salary: $121,750 per year

Projected job growth: 7%

When executives need to make a costly decision, they’re probably going to want a financial manager to weigh in. This vital role uses the information provided by accounting to maintain the financial health of an organization. The scale of a financial manager’s efforts and impacts vary widely—they may manage a specific department, or they may help make decisions that impact the entire company. If it isn’t obvious, this isn’t an entry-level position. Most organizations are looking for financial managers with lots of experience managing finances and ideally, working within similar organizations.

What skills should I have to get a job in finance?

People working in finance are often put under a lot of pressure to make big decisions. By the time you have your finance degree and some experience under your belt, you’ll certainly be prepared to make those decisions. But the rigors of academia can only do so much to prepare you for the external pressures you’ll face.

There could be thousands, even millions of dollars at stake in a given decision. While it may not be your money, your recommendations significantly affect other people’s lives—for good or bad. And no matter how good you are, you can’t be right all the time. There’s an inherent risk in every decision, and you can’t control many of the factors in play. As a financial advisor, analyst, or manager, your role is to recommend the best decision based on the best information available.

That’s a long way of saying: you need to develop realistic expectations. You need to be cool under pressure. And you need a healthy appreciation for the predictable chaos that is finance.

Your classes should give you the analytical and logical tools you need, but it helps if you’re the kind of person who takes the initiative and confronts potential problems in advance. And since part of your job is to showcase those analytical and logical tools to people who may not be trained in finance, you’ll also need strong communication skills.

If you’re going to be a personal financial advisor or work with individuals, it helps to have a little empathy, too. Oh, and I hope you like spreadsheets.

Overview of an accounting degree

Accounting is often referred to as “the language of business.” Without accountants, organizations wouldn’t have the information they need to make decisions—because not even their financial managers would know how much anything costs. Budgets would be useless (or non-existent). You translate the life of an organization into numbers, and vice versa.

It’s no wonder accountants are so valuable. They can help organizations identify and correct wasteful spending, manage complicated payrolls, and equip key players to make wise choices. Organizations lean on accounting to track the financial impact of decisions they’ve made in the past and estimate the cost of decisions they make in the future.

It also shouldn’t come as a surprise that a degree in accounting lends itself to roles in finance.

Let’s explore some of the things that set an accounting degree apart.

Courses you’ll take in accounting but not finance

Before financial experts can perform predictive analysis, they need data. A degree in accounting equips you to gather, organize, manage, and translate a sea of financial information into data that organizations and individuals can actually use. Your accounting program will also teach you how to apply Generally Accepted Accounting Principles (GAAP) to different contexts, and you might also take courses that prepare you for specific accounting certifications and exams.

You’ll likely take some introductory finance, economics, and business courses, which helps you see how accounting fuels other aspects of an organization.

Here are some of the unique courses you might take as an accounting major:

  • Forensic accounting
  • Financial accounting
  • Cost/managerial accounting
  • Government accounting
  • International accounting
  • Tax accounting
  • Auditing
  • Quantitative analysis

Careers in accounting

Accounting is generally more specialized than finance. That’s not to say there aren’t a wide range of careers in finance, but a finance degree is broadly applicable to most of those positions, whereas many accounting careers require additional certifications and licenses.

Here are just a few of the careers an accounting degree can lead to:

Accountant

Median salary: $68,150 per year

Projected job growth: 11%

Obviously, an accounting degree can prepare you to be an accountant. But if you want to be a specific kind of accountant, you’re probably going to need additional credentials besides your bachelor’s degree. And really, these other credentials can be earned without a bachelor’s degree. But the right courses in a bachelor’s degree program could prepare you to take the CPA exam and become a certified public accountant or earn other accounting credentials to advance your career.

Regardless of the kind of accountant you become, you’ll be charged with systematically recording financial information and analyzing and interpreting it in financial reports. You may also draw from this information to give recommendations.

Actuary

Median salary: $100,600 per year

Projected job growth: 18%

Actuarial science is one of the highest paying careers in the U.S. Never heard of them? Actuaries have a strong background in math, particularly, an area of math that heavily overlaps with accounting: risk assessment. Most actuaries work for insurance companies, determining the likelihood of events occurring for particular demographics and then calculating premiums based on the level of risk.

Tax advisor

Median salary: $68,150 per year

Projected job growth: 11%

Nobody likes paying taxes. A tax advisor helps individuals and organizations navigate the intricacies of tax law and recommends ways they could reorganize their assets to save money. This isn’t about circumventing the law: it’s about translating complicated legal codes into tangible actions people can take. An accounting degree gives you a background in tax law, auditing, business ethics, and accounting (obviously). This uniquely equips you to help people prepare for their least favorite time of year.

For individuals, this could mean taking advantage of investment opportunities that come with tax benefits, like IRAs and 401Ks.

For organizations, this may mean changing employee benefits or restructuring a business.

Similarities between accounting and finance

While we hope the difference between accounting and finance is becoming clear, things might still get confusing when you start looking at degree programs. Some colleges blend these two degrees into one and call it accounting or finance.

And even if they don’t, you may have to hunt a bit to find the actual differences between a school’s accounting and finance programs. Even setting aside the general business classes you’re bound to share, accounting and finance have a lot of classes in common that you won’t find in other programs.

In both programs, you might find courses on topics like:

  • Financial accounting
  • Financial reporting
  • Financial ethics
  • Risk management
  • Economics
  • Taxes
  • Auditing

The reality is that accounting and finance are so interrelated that you need to have a grasp of one to fully understand the other. And since finance is highly dependent on accounting, you shouldn’t be surprised if you wind up taking accounting classes to earn your finance degree.

No matter how much we define these two fields, the actual difference depends on the individual school you attend. Take the time to compare curriculum before you commit to one or the other. If you have a particular career in mind, the name of your degree will be less important than the courses you take. Make sure your program is going to give you the right mix of finance and accounting to land the job.

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