Who Sets the Price Ranges on Big Purchases?
Enjoy this week's edition of the Planner's Beta
Beta (n) - climber's jargon that designates information about a climb This digest's purpose is to share observations, ideas, and treasures found this week which you may also find insightful. Sharing does not mean it's an endorsement. I am endorsing the pursuit of knowledge and exploration.
Who Sets the Price Ranges on Big Purchases?
The power of influence can easily be seen in the heuristics we use to make big purchases.
How did you decide on the amount to spend on the last major purchase you made? While you may have taken your budget, income, and other factors into consideration, this article explains why the range you considered was set by something else: clever marketing departments. Retailers understand that most of us need guidelines for making such purchases, which are called “price thresholds” in the psychology field. By carefully marketing price thresholds to the world–that is, by creating “seller-supplied price thresholds”–companies like De Beers, for example, have engrained in our minds the idea that engagement rings should cost two months’ salary. These price thresholds set the range that we formulate in our minds...and how could we possibly go less than the range?
Dr. Utpal Dholakia, the author of this article, summarizes the point for us as consumers: “As I see it, the main takeaway is that if you want to consume prudently, you’ve got to ask yourself whether you want to be influenced in this way by price thresholds sellers give you. Do you want marketers to tell you how much you should spend on consequential purchases, or would you rather decide for yourself?”
Learn more about the way you spend with this quick quiz. Consider some of your largest purchases: automobiles, houses, college education, or significant gifts for major life events. How did you develop your “range”? By altering your spending threshold for your next major purchase, you could supercharge your savings.
This is Key to Growing Your Wealth
This Month's Financial Planning Item - Reviewing Job Satisfaction and Income
What is wealth? I would argue wealth is more than just dollars in a bank account. Wealth is when you are spending your time with the people you love and living a healthy lifestyle in the community you enjoy. And let's face the music, financial wealth is one element of achieving wealth.
Because income plays such an integral part in growing wealth, I encourage you to review your career. These are the steps to take when evaluating your income:
Assess Career Fit and Revisit Your Why
Review Current Pay
Evaluate Other Career Opportunities
Begin Developing an Action Plan if Needed
Assess Your Career Fit and Revisit Your Why
Loving your career is an essential tool for generating wealth. Each year, you should review your values and goals and ask yourself, "Is my current job helping me living my best life? Is it time for a career change? Is my financial situation ready for a new career path?" You may also take this 1-minute assessment to learn about your career fit and how your finances might impact your ability to make a move.
Review Your Current Pay
You may find you are in the correct place after assessing your career and goals, but you may still feel under-compensated for your time and talents. Fortunately, there are many resources out there to determine if your pay is competitive. The first site I encourage people to review is the Bureau of Labor Statistics website. From there, you can search your occupation and find compensation statistics for your job and location. BLS's database is a great starting point. I also encourage folks to review salary information at careeronestop.org. And finally, Glassdoor contains salary details for particular jobs. Glassdoor is excellent to see what employers pay their employees, providing you more detailed information than the government sites. From this information, you may determine if it is appropriate to ask for a raise or look for other opportunities.
Evaluate Other Career Opportunities
It is essential to keep an updated resume on hand at all times. Now is an excellent time to review and update the resume. Here is a downloadable resume template I designed for you to help format a clean and professional-looking resume.
It is always good to shop around on popular job boards like LinkedIn or Indeed. Review available openings. If you find an exciting opportunity searching the job boards but aren't confident, remember it never hurts to apply. An application is not a commitment. If you do get an interview, remember it is a two-way street; you should be evaluating them just as much as they are evaluating you. Suppose you are fortunate to have a conversation with another employer but feel the old job is still a better gig. In that case, you can always decline a new job if provided. Or, if you are still on the fence, and after careful consideration, you may use the offer as a salary negotiation point with your existing employer. Either way, having an interview every once and a while is a good thing. Interviewing is a learned skill that can atrophy with years of no use.
Begin Developing an Action Plan
You may find yourself thinking about changing jobs. Or you may be facing a new promotion. Either way, when faced with such opportunities, you should always give time to consider how best to grow your wealth and develop an action plan. In addition to taking the steps above, if you find yourself trying to answer the technical questions with a career change, be sure to review the linked checklists below.
Cash Flow and Income
Retirement Plans and Deferred Compensation
Tax and Insurance Planning
If you need independent advice on managing income, strategically planning for a career change, or determining how best to move through a job transition to align with your overall aspirations, please review the services I offer and place an introductory appointment on my calendar.
If you are a current Pursuit Planning and Investments client, securely upload any documents needing review to PreciseFP. I am happy to help proofread any resumes, conduct mock interviews, or support you with any career decisions you face. We can discuss this in our next scheduled check-in meeting, or feel free to place an appointment on my calendar.
Checklist: What Issues to Consider if Your Get a Promotion or Raise
Checklist: What Issues to Consider When Starting a New Job
Quote of the Week
"It is not enough to have a good mind; the main thing is to use it well." - René Descartes
Have something on your mind? Schedule a free call with Nate.
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