As kids my brothers and I loved to watch wrestling. We were so into the sport that we would move furniture to create a ring and do everything we saw on TV. One time my brother saw Stone Cold hit Mick Foley in the head with a chair, so the next time we wrestled he grabbed a metal folding chair and slapped me right in the face. When I finally woke up my brother helped me up and said “If mom and dad ask about the bump on your head just tell them you tripped and fell.” The funny thing is, we later found out that the wrestlers on tv use a special kind of chair made of thin metal (to prevent serious injury).
Unfortunately, there are many people who make financial and business decisions and end up hurt because they do what they see without understanding the details “behind the scene.” When making business or financial decisions, you should always take time to understand the economics of the situation. Some of the areas where many people ignore this wisdom and end up hurting themselves are; 1) Real estate purchases, 2) Stock investments and 3) Higher education degrees.
To help you out, here are a few things you should consider when making financial or business decisions: 1) Cash Flow Cycle, 2) Profit margin impact, 3) Tax Implications, 4) Financing options.