Much of what I read in the Financial Planning press is based on statistics. Some of it is even useful. But much of it does not take the human element into consideration.
Humans don’t have a single goal. Would you rather have a lot of money in the bank, or a bigger house? If you’re like most people you can’t have both.
Life is a series or compromises. The husband may want a sports car; his wife may prefer a min-van to haul the kids around.
John Lennon once said “Life is what happens while you are busy making other plans.” How many people started out life planning to travel the world ended up finding the love of their life, settling down and having kids?
The New York Times quotes Barnaby Riedel “Every single financial decision is moving you toward or away from your ideal life.”
Most amateur investors, even high-net-worth people, require guidance from investment and planning professionals to fully understand the trade-offs they are making when they make financial decisions. Without informed analysis deciding to buy a new house, take expensive vacations, funding college, and a long list of other financial decisions all interact and can eventually force people to make trade-offs.
Many people take a seat of the pants approach and end up either spending too much or depriving themselves of things they can afford. To get a better idea of whether your financial decisions are moving you toward or away from your ideal life, call a financial advisor.