Michael W. Boone, CFP, CFASometimes money costs too much. – Ralph Waldo Emerson

There are so many parts of my work that I like that it is hard to pick one favorite.  One of the consistently most interesting parts is the interplay between our values and our money.  What will we give up for money, and what truly is priceless?   

We all have goals that may not be financial, but they have financial aspects. Virtually everyone wants to be financially independent, even if we choose to keep working.  A vacation property near the ocean or mountains would be great for the family. Having enough for a top-notch private university could be a great head start for a child.  Maybe the goal is smaller, just getting a new car, or larger, making a million dollar donation for a charity.  The question we all have to answer is “What am I willing to give up to get what I want?”

Are we willing to get more schooling, or just work a little harder?  What about a second job or adding a few nights and weekends?  What if it means we have to give up a big vacation every year?  What if it means we will have to travel a lot for work?  How much stress are we willing to put ourselves under? What if the price we pay is actually being paid for by those around us, our friends and family who don’t see us much and when they do we are in no mood to interact?  How do we put a price on these things?

We sometimes like to think that many of our most important decisions are not financial, but the truth is that these decisions are often gut wrenching simply because we don’t know how to value our options.  Say, you value your relationships and don’t like to be away from home, but if you had to travel one night a week away from home for $10,000 more income a year would you?  What about $100,000 a year?  How about four nights a week?  What if you were told that if you didn’t take the job you were laid off? What if the time away could buy a better school and maybe even a needed tutor?  What if your family said they would pay you $10,000 a year just to stay home?  What if your family said they would pay you $10,000 a year just to leave!

A lot of what we do in our role as financial planners is to bring clarity to clients’ decision making by helping people put price tags on their goals and desires.  Not just dollars, but what economists call the “opportunity cost”.  Because we usually have more than one goal at a time, what other goal could we reach with those dollars instead?  Like, for example, one year earlier retirement in 10 years might equal the difference between public and private school this year.  Or, you can have the vacation house if the non-working spouse works.  Or, you can have a latte every day for the next 22 years or your kid’s in-state public university education.  Or, you can afford to get that car, the plasma, the ring and retire three years earlier than you thought if you earn 1% more return, or save 10% on your income taxes. 

We don’t make decisions for people, we help them put a price on the goals and dreams they have, so they can go to work deciding which goals they want to achieve and which ones cost too much.