What Is the Relationship Between Personal Financial Planning & Career Success?
Success in any activity might involve a little luck, but it often requires a good deal of planning. Career success depends on many factors, some of which include establishing a plan, realistic self-assessment, handling information and making informed decisions. The same factors help you manage your personal finances. Furthermore, the two activities are closely entwined because changes in one can have profound effects on the other.
Establishing a Plan
The elements of a personal financial plan include a budget for current income and expenses and a long-range plan for saving and investing. The budget tells you how much you can put aside for education, major purchases, vacations, retirement and other life goals. Knowing your long-term goals might guide your career choices. Human resources consultant Lindsey Gardner says, "The ideal career speaks first and foremost to your heart and then to your wallet. Both aspects require planning. Intrinsic rewards may include the feeling that your work is meaningful to you or helpful to others. It is also important to find a career with rewards such as a salary that allows you to meet your financial objectives."
Education Can Be Costly
If you've identified a career to pursue, you probably have some idea of its educational requirements. You might need advanced degrees, certifications and licenses to work in a particular field. At the time of this writing, the average overall cost at a private college was $44,750 per year. Gardner emphasizes, "You should include all educational costs in your financial plan and understand how you will pay for these expenses. If you'll be taking loans, your plan should account for the payments you'll be making, including interest. To avoid surprise, take the time to understand the interest rates and repayment options offered to you before agreeing to any loan." If you are torn between two or more career paths, knowing the educational costs and financial rewards of each alternative might help sway your decision.
Keeping It Real
Both financial and career plans succeed best when they are realistic, notes Gardner. "Assess your strengths to maximize your plans. For example, if you are a spontaneous, high-energy person, you'll want your financial plan to have enough wiggle room to allow you to make unplanned expenditures without breaking the budget," she explains. "You can apply the same traits to work environments and careers where flexibility and adaptability are highly valued, such as emergency medicine, stock trading, outside sales and entrepreneurship. The point is to honestly assess how you operate, and either go with the flow or begin to make changes," she says. By tracking your budget monthly, you can quickly determine whether you've made realistic plans. Reviews and feedback from your employer serve the same purpose on the career front. And, if you run your own business, your income statement and balance sheet will keep you plugged into reality. The income from your career will place constraints on your financial plan, and your financial plan determines how much income you realistically need to achieve your goals.
Financial planning involves many variables: budgets, spending, investments and credit, to name a few. Your plan must organize and present the data so that you can make informed decisions. Good personal financial software can help by maintaining your budgets, accounts and investments and automatically updating the information through online connections. Gardner observes, "The ability to organize personal financial plans requires similar skills to those that are needed to succeed in your chosen career. In both realms, you must collect, process and make decisions based on data." Just as you can use personal financial software to help tame an avalanche of information, you might have to rely on software to help you perform your work tasks. "In the Internet age, many endeavors require you to be comfortable with computers and applications in order to succeed," concludes Gardner.