Money Decisions Are Rarely Just About Money

Did you recently spend money on something that you knew was not necessarily the best financial decision? Your gut was telling you that you really wanted to do it, while the numbers were telling you something completely different. I see this happen all the time.

A common example today is the desire to have a paid-off home in retirement. For someone with a mortgage rate under 3%, paying it off early may not make the most sense purely from a financial perspective. The numbers may tell you to keep the mortgage and invest the extra money instead. But your gut may be saying:  I want the peace of mind of not having a mortgage payment in retirement!

I once worked with someone who was willing to delay retirement by 2-3 years to pay for an extravagant wedding for her daughter. The numbers clearly didn't support it. As we talked more, we realized it wasn't really about what the daughter wanted. There was something deeper at play—the importance she placed on hosting a wedding that reflected a certain level of success and standing within her circle of friends.

Was that worth working several more years?

What I have experienced over the years is that money is never just a numbers decision. It is also an emotional decision. The way we were brought up and our early experiences with money have a lot of influence over how we think about it today. Two people can have almost identical financial situations and the same amount of assets. One may feel an enormous sense of peace and security, while the other may feel that it is simply not enough.

That is why, in our financial planning conversations, we don't ignore what your gut is telling you. We explore it. Why do you feel this way? What is really driving this decision? Then we look at the numbers and decide whether following your gut is still the best course of action.

Because at the end of the day, your money and resources are meant to help you live well and give you peace of mind. But sometimes, understanding why we want something is just as important as figuring out whether we can afford it.