Opinion
Why the best money decisions don’t have to make financial sense
Paridhi Jain
Money contributor“Should.” This word comes up a lot when people talk about money.
Sometimes, it’s a question shrouded in doubt: “Should I make this decision or that one?” Should I pay off my credit card, or put money in savings? Should I travel or put money in my super?
Being focused on what you “should” do financially can leave you missing out on living a good life.Credit: Simon Letch
Other times, it’s a confession heavy with regret: “I should have done this.” I should have started investing earlier. I shouldn’t have spent so much money.
All these “shoulds” share something in common. They’re based on an assumption there is a correct decision to be made, and specifically that the correct decision is the one that maximises financial growth.
Inevitably, this leads to guilt and regret when you don’t make the “correct” financial choice. But what if maximising your financial return isn’t always the best decision, anyway?
The point of life isn’t to make the most money. The point of money is to make the most of life.
The financial industry may tell you I’m nuts. You’re supposed to chase financial growth and optimisation right? More savings, higher returns, lower fees, fatter investment portfolios … isn’t that the whole point?
By now, I’ve talked to hundreds of people about their finances, and I frequently see that most people miss a crucial detail in personal finance.
The point of life isn’t to make the most money. The point of money is to make the most of life.
It’s easy to fall into the trap of prioritising financial growth over everything else. But when you look at money in the context of your life as a whole, the picture looks different.
Suddenly, the best decision isn’t always the one that makes the most financial sense.
For example, think about which credit card you “should” pay off first. From a financial perspective, the one with the highest interest rate. But it might feel less daunting to start with the lowest balance.
Which investment option should you choose? From a financial perspective, the one with lower fees. But higher fees could buy you the ability to outsource investing and reduce your stress.
Should you quit your stressful high-paying job? From a financial perspective, no. But if quitting buys back your mental, emotional and physical health, maybe that’s worth it?
These examples seem obvious on paper. Yet so many people are stuck in a constant battle between choosing what is most financially optimal and what is most optimal for their life as a whole.
So, how do we eliminate the stuck-ness that comes with trying to choose between the two? How do we get rid of the guilt that comes with making the less financially optimal choice?
Here are some things that might help:
1. Get clear on and take ownership of your priorities. Often, people struggle to make a choice because they’re either not clear on, or haven’t fully owned, their personal priorities.
In that lack of clarity, it feels easier to get someone else to tell you what to do, so you go around asking: “What should I do? Should I do this, or that?” But when you’re battling internal conflict, external reassurance doesn’t always help you in feeling more confident about your decision.
The only real way forward is to get clear on your priorities and own them.
This can be tough. If everyone is telling you your finances are the most important consideration, it can be hard to recognise that, maybe right now for you, it’s actually not.
Maybe you want adventure (e.g. travel) or change (e.g. a different job) more than financial security, or peace of mind (e.g. low-hassle investment options) more than financial growth.
Only you can decide what’s important to you.
2. Give yourself a healthy margin for error. Underneath much of the should-ing we do to ourselves is a silent anxiety called perfectionism. We want to get it right, on the first go, without making any mistakes.
When we don’t, we unleash our ruthless inner critic. But what if we accept that no one gets it right the first time and that mistakes are inevitable? That your errors are just part of the learning process?
When you start to see your financial life as a journey instead of just an outcome, when you start to prioritise learning over getting it right, you spend less time paralysed in indecision.
This perspective helps you see that there often isn’t a universally correct financial decision anyway. There isn’t a perfect decision, or even a best decision. There’s only the right decision for you, right now, based on your priorities and circumstances.
This can be scary. It means that, while others can present you with options, no one can decide what’s the best thing for you to do.
But it’s also liberating. It means you don’t have to spend your life following a rule book of things you should do. You get to define what the right decision is for you.
And that decision doesn’t have to be the one that makes the most financial sense.
Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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