3 answers

Should I major in Finance or Economics?

Asked San Jose, California

I am currently a junior in High School and I am very interested in working on Wall St. when I grow up, as I have been for a long time. However, with the main majors like Finance, Economics, Accounting, and Business, choosing a major has become difficult. So far, I have narrowed the choices to Finance and Econ., but I want to learn more about each so I know what I can do with the specified degree if I happen to work at my dream job as an Investment Banker or other possible occupations if that doesn't work out. Any information would be helpful. #college-major #finance #economics #college-majors #investment-banking #investment-banker

3 answers

Justin’s Answer

Updated New York, New York

The foundations of finance is economics. The difference is the study of economics is more academic in nature, where as finance classes tend to be more practical.

The major topics in economics are macroeconomics (how an entire economy functions) and microeconomics (studying individual participants in the economy). Much of the classwork involves abstract thinking where you are discussing hypothetical situations that are very basic so that you can narrow down a discussion to a single equation. For example, if you want to measure supply-and-demand for sneakers, you will define how many people want sneakers, how much money they have to spend and how much it would cost for a factory to produce shoes. This kind of thought exercise is intended to train you to think broadly and it is applicable to all sorts of careers after you graduate from college.

In contrast, finance classes are more practical. The goal is to help you specifically get a job in finance, on Wall Street or elsewhere. The classwork is narrowed to such topics as how a business can issue stocks or bonds and then how an investor should value those stocks and bonds. In the example above, a finance class may concern itself with how a sneaker designer could raise the money to make shoes or how much an investor should pay to own part of the sneaker factory.

In general, most colleges require that you take one or two economics classes before taking your first finance class. That can help you decide if you like the theoretical work in economics. If not, then perhaps you will find it easier to relate to finance class work.

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Thank you for the information! I'm gonna keep this in mind when choosing my major come application time in November.
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Hi Justin! Thank you so much for the amazing advice you provided to Prithvi above! I had a few follow up questions I wanted to ask out of my own curiosity: 1. Could you talk a bit more about your career path into private equity? Did you major in finance in college? Did you get a job in a traditional investment banking role, or perhaps you jumped straight into PE right out of undergrad? 2. What next steps should someone looking to work on Wall Street take now as an undergad. Thanks so much in advance. Best, David
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Hello David. I attended an undergrad business school specifically to get a job in advertising. Suffice to say, I changed my mind. I loved finance classes and this led to an internship at a bank. It wasn’t investment banking, but it exposed me to the financial industry. When looking for a full-time job, I explained how investment banking fit my interests and skills. At my first job, we provided financial advice to businesses. Investing directly in businesses seemed like a good next step. That led me to private equity, where we invest in companies outside of the stock market. If you are interested in finance, combine classwork with an internship. Any finance-related job can show a future potential employer that you were curious enough about finance to pursue it outside of campus.
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Hi Justin! Thank you so much for the update. It was really helpful to hear more about your personal experience. Cheers, David

Scott’s Answer

Updated San Jose, California

I agree with Lisa above. Majoring in Finance as an undergrad may help get your foot in the door, but it doesn't assure you of anything. Most employers are looking for demonstrated achievement, not necessarily a narrow focus in one area. Majors in English and other social studies can do well in finance. I don't work on Wall Street, but I've had a successful, 32-year career in equipment finance. I took some micro-economics and accounting in school, and I'm good in math, but my major was I.R. The most valuable stuff I've learned has been dealing with people, polishing my communications skills and very practical things that you wouldn't generally encounter as an undergrad.

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Thank you for the additional info! Im definitely rethinking a lot about the path I want to take to one day work on Wall St. and it looks like there's a general concensus regarding how I don't need to major in something Mathematics related.

Lisa’s Answer

Updated Mountain View, California

I studied finance in undergrad and during my internships on Wall Street, I met people from all different majors. You can major in the area you enjoy most and is most interesting to you - whether its anthropology, history, women's studies. Once you get there, there is a one week intensive training to train you on building financial models and performing corporate valuations. Most of the learning you do actually happens on the job, so I would say - study what you are passionate about and if that's economics or finance, that's great - but don't let that limit your decision making.

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Thank you for the response! I definitely thought for the longest time that a job on Wall St. required a degree in something related to Math, like Accounting or Economics.