Make Tough Financial Decisions With Emotional Balance
There are many financial decisions that boil down to much more than numbers. Sometimes the emotional benefits of something far outweigh the financial ones, and emotional balance can help you figure it out when things get tough.
Carl Richards of The New York Times recently recalled the decision he and his wife made to be a housewife. Overall, he determined that his family had missed out on over $ 1 million in income, but it was worth every penny. Richards now has a new section in his budget balance sheet for things that have high value despite not having monetary value (or costing money):
I just want us all to understand the need to write down our choices and assets, even if they cannot be calculated. Think of these articles as strings in your emotional balance … You can easily conclude that having children is always a bad financial decision, and you’re right – mathematically. Except for a small question about how much value you attach to creating and raising a family. It doesn’t fit exactly or numerically into any traditional column of assets or liabilities, but it will fit into your emotional balance … If we limit our understanding of what can be measured in dollars, most of what brings us happiness can be defined as bad financial decisions. Travel, time with friends, or long meals with parents may all be eligible (or disqualified, as the case may be) if we also don’t weigh the benefits that we can’t put into the calculator. Real financial planning must take this reality into account.
You may not be able to quantify things like love, family, or experiences, but the value of these things cannot be denied. As you go over your budget, add all of your “assets” of emotional value. You don’t need to give them a price, but if that helps you, give a rough estimate of what these things are worth to you. The next time you have a difficult financial decision to make, look to your budget and your emotional balance to make a decision. The entire article is worth reading, so check it out at the link below.
Emotional Balance Can Help You Make Financial Decisions That Are Difficult to Quantify | New York Times