What is Quality of Life
Quality of life is a highly subjective measure of happiness that is an important component of many financial decisions. Factors that play a role in quality of life vary according to personal preferences, but they often include financial security, job satisfaction, family life, health and safety. Financial decisions usually involve a tradeoff wherein quality of life is decreased in order to save money or, conversely, quality of life is increased by spending more money.
BREAKING DOWN Quality of Life
Commuting to work provides a good example. It is possible to save money on housing by living farther away from popular job centers and commuting to work. However, commuters do not have as much time to spend with family or on hobbies because of the extra time spent sitting in traffic or using mass transit. Some people consider this tradeoff worthwhile, while others choose to maximize their quality of life by spending more money to live closer to work.
Hours spent at the job versus free time can be another measure of quality of life. Professionals may choose to take high-paying jobs that require extended or late work hours on a regular basis in order to earn the income they desire. This may include prolonged business travel for in-person meetings at distant locations. While such choices can increase liquidity to fund their private lives, this limits the hours available to spend on vacation or other personal endeavors.
Workplace conditions are another aspect of quality of life. Different jobs may require workers to perform under extreme exertion such as heavy lifting or repetitive labor that can tax the body over time, possibly leading to long-term physical impairments. Conversely, a job might drastically restrict the movements of the worker because of limited space to perform their tasks, such as staffing a toll booth or a remote security guard station. There are also jobs that can expose employees to potential hazards such as harmful chemicals, heavy machinery, and high-risks of falling or other injury. The possibility for harm that could affect their enjoyment of life is weighed against earning a salary to provide the type of lifestyle the worker desires for themselves and their family members.
Quality of life is also an issue when developing a personal savings plan. In this case, the tradeoff involves a sacrifice of current quality of life in order to improve future quality of life. This may include limiting immediate expenditures by purchasing lower cost items rather than buying higher cost, premium items.