By Tom Kirk
Balanced can be defined as having different elements in the correct proportions, as in eating a balanced diet. When we do so, we not only get the nutrition we need to survive, but also a healthy and strong mind and body we can enjoy to experience life as we choose.
Balanced financial decision making is the process of combining the different economic elements available in your life so they support and reinforce each other and help create the financial future you have in mind. Like the five main food groups there are five major economic elements at work in everyone’s financial life. These are:
- Risk management
Almost every financial decision you will ever make lies within one or more of these elements. For instance, if you determine that you need to save more money to accumulate enough to quit working someday, you can:
- Earn more
- Spend less
- Invest more aggressively
- Some combination of the above
But more aggressive investing brings with it increased risk in our capitalistic world. There is no free lunch. So your decision must be balanced (there’s that word again) against the risk you are willing to accept, your time frame and the financial future you are trying to create.
This is an oversimplified example, but demonstrates the connectedness of these economic elements and how changes in one element affects others. How you combine these economic elements in your life is as unique as your fingerprint since everyone has different amounts of each of them and different desired financial futures.
Call a FirstWave Financial WealthCoachTM to discuss if a customized WealthPlanTM is what you need so that you are confident that your financial decisions support and reinforce each other. Get on the path to help create the financial future you have in mind.
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You should not assume that any discussion or information contained in this publication serves as the receipt of, or as a substitute for, personalized investment advice from FirstWave Financial. A copy of the FirstWave’s current written disclosure statement discussing our advisory services and fees is available upon request.