In the previous article we discussed the first of five steps in building your financial profile i.e. Constructing Your Financial Profile - Your Stage of Life. In this article we will consider second step in constructing your financial profile.
One significant aspect your life-style is your career choice. When you select a career, you lock in, to some extent, your earnings potential.
For instance, if you opt for a career as a librarian or teacher, you’re unlikely ever to earn a six-figure income. By contrast, if you work in investment banking or sales, chance are good that you’ll become a high earner.
Or maybe you are one of those people who are willing to make less money in exchange for more leisure time. Their decision also is a life-style choice.
Your spending and saving habits are another aspect of your life-style that will significantly affect your financial planning decisions. Are you, for instance, oriented towards immediate or deferred gratification? Are you more concerned about living for today of planning for the future?
We all differ on how we view finances. And frequently these differences crop up within family. In fact, surveys have consistently shown that money is number one on the list of items married couples ague about.
Usually, our disagreements focus on trade-offs. With a limited amount of resources, do we save or spend- and what do we spend our money on?
Our decisions usually boil down to personal preferences. What’s more important? A nicer car or a better home? A vacation house or an exotic vacation?
These decisions also involve confidence – or lack of confidence – in the future. Can you spend more than you earn today because you know that as some later point you will earn more than you spend?
Life-style decisions by their very nature are personal. They are no absolute rights and wrongs. Whether you choose to spend your money on entertainment or clothes is your business. Again, the important point: You should know yourself and not try to fit into someone else’s mould.
I suggest you also read the preceding articles that set the tone for this article:
Financial Planning - Part 1
Constructing Your Financial Profile - Your Stage of Life
One significant aspect your life-style is your career choice. When you select a career, you lock in, to some extent, your earnings potential.
For instance, if you opt for a career as a librarian or teacher, you’re unlikely ever to earn a six-figure income. By contrast, if you work in investment banking or sales, chance are good that you’ll become a high earner.
Or maybe you are one of those people who are willing to make less money in exchange for more leisure time. Their decision also is a life-style choice.
Your spending and saving habits are another aspect of your life-style that will significantly affect your financial planning decisions. Are you, for instance, oriented towards immediate or deferred gratification? Are you more concerned about living for today of planning for the future?
We all differ on how we view finances. And frequently these differences crop up within family. In fact, surveys have consistently shown that money is number one on the list of items married couples ague about.
Usually, our disagreements focus on trade-offs. With a limited amount of resources, do we save or spend- and what do we spend our money on?
Our decisions usually boil down to personal preferences. What’s more important? A nicer car or a better home? A vacation house or an exotic vacation?
These decisions also involve confidence – or lack of confidence – in the future. Can you spend more than you earn today because you know that as some later point you will earn more than you spend?
Life-style decisions by their very nature are personal. They are no absolute rights and wrongs. Whether you choose to spend your money on entertainment or clothes is your business. Again, the important point: You should know yourself and not try to fit into someone else’s mould.
I suggest you also read the preceding articles that set the tone for this article:
Financial Planning - Part 1
Constructing Your Financial Profile - Your Stage of Life
Email me with any queries or comments.
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