plonkee money an english-er's thoughts on personal finance

May 7, 2008

make choices without being constrained by finances

Filed under: philosophical — Tags: , , — plonkee @ 4:02 pm

So, the other day I was talking about how if you’re a stay at home parent, you need to do things to mitigate the financial impact of that choice. It’s not a choice that everyone faces (and I’m one of the people planning to avoid permanently). But, it’s an example of a wider principle.

There are lots of choices that we make that are chosen for reasons other than finance. We might decide to live in a certain location because it offers the social environment that we want. We might decide to get have a big party when we get married, because we want to celebrate with all our friends and family. We might decide to have children. We might decide to switch careers, because we don’t like the job that we do. The list is endless.

I hope that most of your big choices are not made primarily for financial reasons. I hope that you choose to live somewhere that you like living, I hope that you get married the way that you want to, I hope that you have a job that you enjoy, I hope you have children or remain child-free without being burdened by the financial costs. I hope that you aren’t forced into major life choices simply because you cannot afford your preferred alternative.

On the other hand, just as there are financial downsides to being a stay at home parent, so can there be to our other big choices. Living in a nice area is expensive in a continuous and ongoing fashion. Throwing a big wedding will probably cost thousands and thousands of pounds. Not every fun job is the highest paid. Children eat money – well they eat food, and food costs money.

For every choice you make that has major financial downsides, you need to mitigate against them. My mantra is that I can’t have my cake and eat it all at the same time. I choose to live on my own, but that means that I can’t afford a car, so I mitigate by living close enough to walk to work. I choose to travel extensively, but mitigate that by concentrating on budget travel.

If you want to live take a lower paid job, you’ll need to cut back on your expenses, and be willing to devote a greater proportion of your income to savings and investings. If you want to resume your studies, you need to investigate grants, scholarships and bursaries, as well as getting the best possible financial terms on your course. If you want to have a big fat wedding, then you need to save up for it, cut costs where they are not important to you, and focus on the most important elements.

Most choices that we come across don’t have a right and a wrong answer. It’s usually ok to decide either way. Be in a position to do what you really want, by mitigating against all the financial downsides of your choices.

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