"Whatever you have, spend less" - Samuel Johnson.Every day we make decisions about money, which have an effect on our standard of living. Sometimes they are only small ones, not related to
above-mentioned areas of life. Daily you have to make financial decisions on which items to spend your money. You are in effect managing director of your family's business. Spend more than you get in, your company (business) will soon go broke. Consequently, you have to ensure that you live within your means and balance household books (weekly or monthly depending on pay-day)... otherwise you will get into financial difficulties.
The more money you are able to save each week or month, higher will be your ultimate standard of living; although being a miser will not bring happiness. You have to strike a balance in your life between saving and enjoyment (= spending). After all, who wants to get to a comfortable retirement after a lifetime of frugality and no memories? We all know that "penny-pinchers" and "Scrooges" are often most unhappy people in world and that it's always better to give than to receive. Is it really, or only for saints?
Your household finances are run just like a business. At end of each month, how much of what you earn stays in your own pocket? You will probably find, like most people, that you are paying everyone else but yourself: butcher, baker, candlestick maker and other accounts, like paying off car repairs and windows broken by kids (happened last week - "Oh bother!").
Unfortunately we can't do without money. Also, older we get, more we normally need. You get used to a certain standard of living and comfort, but as you get older you need far more capital than you thought. We will look at those various life stages we go through, together with our major financial responsibilities.
The main areas that affect us over our lives include:
# buying a home # choosing a mortgage bond # medical cover # children's education # budgeting # planning for lifestyle goals (e.g.. a new home, car, holiday, business) # replacement of consumer items, like car, furniture, washing machine # retirement planning # investment planning # estate planning for very wealthy people (I don't know if UK and USA have estate duty. NZ has done away with it) # professional services (such as: legal, financial)
