CPA

Finance vs. accounting degree: Which major to choose?

young student thinking with arrows over head

This conversation usually starts the same way – staring at your computer with six tabs open of “finance vs. accounting” searches.

How are accounting and finance different? Let’s look at how each one is defined.

Finance vs. accounting degree

Finance is generally considered the shifting or manipulation of money, whereas accounting is the tracking of these manipulations. In other words, finance works to plan the distribution of business assets — accounting ensures accurate tracking of these transactions.

For finance, this could mean the management of investment portfolios or deciding how your company allocates its capital. In comparison, application of this in accounting could mean tracking transactions in the general ledger and creating the financial statements.

Finance and accounting degrees — and the careers they’re preparing you for — reflect these definitions through the classes you’ll need to take.

The real difference in the classroom comes during the intensive junior and senior years when you load-in on specialized finance vs. accounting classes. In finance classes, you’ll learn more about best practices of portfolio management, capital investments and financial projections. In accounting classes, you’ll start to become familiar with rules and regulations of the profession, such as Generally Accepted Accounting Principles (GAAP) and the US Tax Code.

Each career comes with a different knowledge set, but finance and accounting also require an understanding of how each works. When you compare majors this is likely where you see an abundance of overlap.

Decision time. Now that you have a baseline of how finance and accounting are different, you’re probably wondering — how do I decide between the two?

Finance or accounting – Which degree is better?

To determine whether finance or accounting is more suited for you, consider these factors:

  • What careers are you interested in?
  • What salary do you want to earn?
  • What is your working style?
  • Are you interested in work travel?
  • What additional schooling or licensing may be required?

Below, we’ll take a look at each of these factors and how they should contribute to your decision to pursue a finance degree vs. accounting degree.

Finance and accounting careers

A fantastic benefit of both a finance and an accounting degree is that either offers a wide variety of career choices. Every company needs someone to manage and track the cash, right? That’s why both careers are highly regarded — and two of the most in-demand among all professions.

The chart below shows key job titles you’ll see coming out of college and later in your finance and accounting career. In an entry level accounting job, you’ll likely report to, or work with, the company controller and CFO. A finance job can lead down that path, too, but might also report to a finance director or senior investment manager.

Finance job titles Accounting job titles
Financial analyst Public accounting (financial auditor, tax accountant)
Portfolio manager Cost accountant
Financial advisor Controller
Investment banker Chief financial officer
Potential salaries

One of the top thoughts rolling through your mind probably sounds something like, “how much money am I going to make?” Completely valid when weighing a finance vs. accounting degree decision.

Both career paths are historically among the highest paying, from entry level jobs to C-suite offices. According to the US Department of Labor’s Bureau of Labor Statistics, the median annual wage for financial analysts was $85,660 in May 2018. Comparatively, the median annual wage for an accountant in 2019 was $71,550.

As with many entry level jobs, you may begin in the $50,000 to-$60,000 yearly range (depending on the city you live in) — but many top earners in finance and accounting ring-in more than $125,000 annually.

What is your working style?

You want to be happy in your job, right? Choosing a path that complements how you work and think is essential to that mission.

As you may have gleaned, finance careers typically deal in the big-picture of economic and market trends. Financial projections and analyses are highly reliant on these factors, so this work can suit you if this is how you think.

Conversely, these factors don’t have a huge impact on accountants’ daily lives. Accounting careers are suitable for individuals who enjoy diving into data and ensuring accuracy in financial statements and transactions.

Are you interested in work travel?

Considering travel requirements is also an essential part of finance and accounting careers. This can vary depending on the specific job, but an audit position at a public accounting firm can require a decent amount of travel. In contrast, a cost accountant at a local company more than likely won’t travel at all.

Many financial advisors log heavy local mileage for client meetings. On the other hand, a financial analyst probably only goes to the company office each day.

Travel can be very demanding in some aspects but also very rewarding for those who enjoy it. So while this might not be a top concern, it should be weighed in your decision.

Which degree is better?

You might be able to guess where this is headed, but there’s no clear-cut answer to your question. Each of the finance vs. accounting specific factors are important considerations that make for a highly individualized decision that depends on how you think and work — as well as what interests you.

In the end, finance and accounting careers can be rewarding in both intangible and monetary ways. What more can be said than, good luck with your decision!