Components of a Financial Plan
February 12, 2025
In the past month, the Dow Jones Industrial Average had seen a spectacular fall. The market had crashed more than a thousand points. This crash happened on the speculation that the Federal Reserve i.e. the central bank of America is planning to raise interest rates. The mere mention of the possibility of an interest rate […]
The fall of the Silicon Valley Bank happened very suddenly. The bank had gone from a healthy functioning bank to near bankruptcy within 48 hours! As a result, the credibility of the entire American banking system has been brought into question. This is because commercial banks are not like regular organizations. In most cases, they […]
The business of sports leagues is inherently intertwined with the finances that the franchises have. It may appear that the success of a club is determined by the performance of its players on the field. However, that is not the entire truth because, at the back end, there is an entire team of professionals who […]
When we think about investment banks, as well as the activities that they undertake, we tend to think about initial public offerings, debt syndication, and other such activities that are very visible to the public eye. However, the reality is that a lot of investments that are routed via investment banks are actually private placements. […]
Credit enhancement refers to the artificial restructuring of credit products which results in the improvement of its credit rating. In simple words, if a bond being issued by an entity has credit rating BB+, it can use credit enhancement techniques to increase its credit rating to AA+ or so. There are obvious benefits of using […]
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 *