Earnings could be active earnings or passive earnings. Earning by way of Salary when employed; running a business/profession are active earnings. When one receives pension, annuity, rental, interest and dividend on Investments those are called as passive earnings.
An individual's Career Choice, getting an employment and ability to grow in career/business/profession determine ones likely earnings and standard of living.
Coming to the factors those could potentially affect earnings; Career chosen/type of job, Geography of employment, Education level, Employability skills, Prior Experience/Performance, Economic Environment, Workplace trends and opportunities, Competence to grow in career/profession/business.
Spending is money consumed for purchasing goods and services. The way one spends money determines the value received, and influences economy. Every purchase contributes to the demand for product or services. An economy can't produce all goods and services that consumer want, and majority doesn't have resources to get what they want, which is also called as Law of Scarcity.
Scarcity prevent choices among alternatives; When making a choice alternatives are sacrificed; Highest valued alternative is sacrificed when choice made is based on the Opportunity cost; Choosing one item above other is called Trade-off; Responsible Spending includes researching & planned purchases, and making wise choices in the light of opportunity costs and Trade offs that apply.
Keep watching this space for the remaining part of Personal finance!
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