Components of a Financial Plan
February 12, 2025
Psychographic models have evolved over the ages. They first began with the Bernwall model, which was a one-dimensional model. It later evolved into the BBK model, which was a two-dimensional model. Finally, in recent times, three-dimensional psychographic models have been developed. In this article, we will have a closer look at the three-dimensional model as […]
Perpetuity is a very important concept in corporate finance. The concept of perpetuity makes it possible to value stocks, real estate and many other investment opportunities. The valuation of perpetuities is theoretically very simple. The concept of perpetuity as well as the formula required for its calculation has been explained in this article: Stream of […]
Financial modeling is an intensive technology process. This means that at the present moment also, financial models use the latest technology in order to ensure that the most up to date results are available during the simulation. However, with the passage of time, technology is also advancing rapidly. Improvements like machine learning, robotic process automation, […]
The profession of investment banking has evolved over the years. Earlier, they were only used when companies wanted to issue securities and raise capital. Over the years, companies have realized that investment bankers know how to make securities more palatable to the investor community. Hence, they also know how to run the process in reverse, […]
Commercial banking has traditionally been slow to adopt the latest technology. However, over the past few years, commercial banks have undergone so much transformation that they have now started using different technologies to complete different steps of the same process. In order to foster automation and better adoption of technology, it is important to view […]
The United States of America is full of people who have huge student loan debt, credit card debt, and mortgage debt. There are many reasons which can be attributed to this massive increase in personal debt. However, the inability to completely understand and apply the concept of earnings power is also an important reason which has caused this debt. In this article, we will understand what the concept of earnings power is and how it can help people make better decisions related to personal finance.
Simply put, earnings power is the ability of a person to sell a product or service and then generate earnings from the sale. However, it must be noted that different people have different earnings power. The example of a grocery store can be considered to better understand this concept. There are several people who work in a grocery store. For example, there are people who work as cashiers and stockists. On the other hand, there are certain employees who manage certain departments and even the entire store. Lastly, there is the CEO of the grocery store.
It is important to note that all three types of people work for the same company. Yet, they get very different monetary benefits in lieu of their efforts. This is because they have different earning powers. The balance of this article will explain the concept of earning power in more detail.
The earning power of a job is determined by several factors. Some of the important ones have been listed below:
It is ironic that we teach young people how to manage their money once they have earned it. However, we do not teach them much about how they can earn more money by making the right choices.
The bottom line is that earnings power is an important concept of personal finance. It should be taught to young people before they begin their careers. It should serve as a guide for them to make effective decisions.
Your email address will not be published. Required fields are marked *