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Earning
Are you earning what you’re worth? Many of my career coaching clients, while searching for a new job, realize that their salary had been below current market rates for some time. It is rare for an employer to raise our salary on their own initiative if we haven't explicitly asked for it... Can you negotiate a higher rate if your work has genuinely become more valuable? Of course, salary reports and statistics won't give us a complete answer as to how much we should be earning, because our income depends not only on our knowledge and skills but also on our approach to work, efficiency, personality traits, ability to present ourselves during the recruitment process, and the local job market situation. To some extent, it also simply depends on luck.
At least once a year, ask yourself if it is possible for you to earn more, considering the skills and other assets you already possess. Think about whether you can do something to help you earn even more or with less effort. Is there another way you can use your existing skills and resources to grow your wealth? Are you able to acquire new skills that will increase your standing in the eyes of employers? Can you manage your own assets more effectively? Are you ready to take risks and change jobs or switch industries to earn better? Is your approach to work and professional development, as well as your level of motivation and engagement, appropriate? In these areas, it is worth consulting a career coach or advisor to make the most of your potential and opportunities in the job market.
Spending
Do you spend money in a reasonable way that fits your financial situation? Or do you live beyond your means, spending everything you earn and living in constant fear? Some of my financial coaching clients struggle immensely with maintaining discipline and resisting compulsive shopping or buying things they don't actually need, having simply succumbed to a momentary whim instead of considering the necessity of the expense. Many people are highly susceptible to "buy it – you deserve it!" style advertising, only to find out later that they spent much more than they intended. Every purchase means less money for other expenses or fewer funds for saving or investing.
Even if you earn a great salary and feel you don't need to limit your spending, it is good to learn how to manage money wisely and make smart purchasing decisions. It is also worth teaching this skill to children, as it is an essential factor in achieving financial balance and avoiding stress, or even falling into debt.
Investing
Many people believe they earn too little to think about investing. It is true that if we have limited financial resources, we won't be buying rental properties, gold bars, or large stock portfolios. However, investing also means dedicating money to acquiring skills that will help us earn more, buying equipment that makes our work easier, or making decisions about where to best allocate our funds—even if the amounts aren't large. Of course, it is also a trap to spend too much on investments while neglecting the important needs of yourself or your loved ones. Moderation and common sense are always essential.
Saving
Contrary to appearances, the level of savings you have doesn't depend solely on the size of your paycheck, although it is obviously much easier to set money aside when you earn 20,000 PLN a month than when you earn only 3,000 PLN. However, there are many people who earned huge sums for decades and then complained in the media that they had nothing to live on, such as certain film or stage stars. The fact is that—depending on our psychological financial identity profile and our habits, beliefs, and values—saving will come naturally to some, while others will simply have to learn it, either on their own or with the help of a specialist. Even in young children, we can see that some know how to save the money they receive, while others spend it all immediately... And can you save? Do you spend more the more you earn, so you are always stressed at the end of the month? Or perhaps, despite a good income, you haven't built a financial safety net?
Borrowing money
Hundreds of thousands of people have fallen into debt as a result of taking out loans, whether from banks, non-bank institutions, or by borrowing from family. Many people live "from overdraft to overdraft." Banks compete to encourage us to take on debt, and many stores—especially electronics retailers—urge us to buy on 0% installment plans. Is it easy to convince you to spend more than you earn? Are you eager to succumb to advertisements and buy on credit? Or perhaps you belong to the group that avoids taking out a loan, even when it is necessary to improve your quality of life (e.g., buying a larger apartment) or to grow a business (e.g., an investment loan)?
Risk management
Life is full of risks, and many potential dangers are completely beyond our control. However, we have some influence over others, for example, when we significantly exceed the speed limit while driving. Some risks can be predicted—at least to some extent—and taken into account when making decisions (e.g., the exchange rate risk of a foreign currency loan). It is impossible to prevent all unwanted situations. However, in some cases, we can protect ourselves against a given risk by purchasing appropriate life or property insurance, or simply by avoiding certain situations, such as building a house too close to a river. How do you manage risk in your personal and professional life? When making serious financial decisions, such as taking out a mortgage, starting your own business, or co-signing a loan for someone else, do you analyze the type of risk involved and whether it is possible to limit the occurrence of that risk or at least minimize its negative consequences for you and your loved ones?
Retirement planning
You don't have to be an expert on the pension system to know that if we want to be financially secure in old age, we cannot rely on what we are mandatorily required to set aside in the state pension system... Only a small percentage of people have enough money to save for their own retirement without any sacrifices. Most of us, in order to set aside funds for a financial safety net or retirement, must give up some of the consumption we desire right now. Experts emphasize, however, that the habit of consistently setting aside even small sums over decades plays a huge role in securing one's future. What is your plan for life when you are no longer able to work? Do you think about what you will live on in retirement? Even if you still have 20–30 years until retirement, it is worth starting to think about it now. Passive income is one of the solutions that allows you to generate earnings even when you are no longer performing any work.
Tax planning
Probably no one likes to pay the "state" more money than they absolutely have to... It is therefore worth consulting an expert who can advise on the most favorable ways to settle accounts with the tax authorities in our specific case. This is extremely important, and not just for those running their own businesses. A good tax advisor is truly worth their weight in gold... Through proper tax optimization, we can save significant amounts. The "New Deal" (Polski Ład) has caused consulting firms to be even more overwhelmed than before. So, plan your visit to an experienced tax law expert in advance.
Estate planning
In other words, planning what will happen to your assets after you pass away. This is an area that generates the most family conflict. It leads to arguments, resentment, and even the severing of family ties or years of litigation. Furthermore, inheritance laws can be quite complex, especially when there are multiple heirs who cannot reach an agreement on how to divide the estate. By their nature, legal regulations often fail to account for a family's specific situation—for example, if one child has dedicated significantly more time or money to caring for an aging parent than the others, they will not receive more under statutory inheritance, despite having incurred greater costs. If we want to spare our loved ones disputes and frustration, it is worth taking the time to consult with an inheritance law specialist and draft a will, even if we statistically have several decades of life ahead of us.
Think about how you are doing in each of the 9 areas of financial management. Which ones do you feel most confident in, and which ones are you neglecting? Which areas cause you the most trouble? Why is that? What steps can you take to gradually improve your performance in each of these areas? In financial coaching, I work with clients on these types of issues, among others.
