When it comes to making financial decisions, we often hear the question, “Does it make sense?” However, there are a couple of issues with this approach. First, it’s the wrong question to ask because what makes sense for one person may not make sense for another. We all have unique needs, wants, and circumstances. Instead, the better question to ask is, “Does it make sense for me?”
The second problem is that we don’t always consider what it truly means for something to “make sense.” Is it logical to buy an expensive car when a cheaper one will do the job? Should you splurge on new winter boots when your old ones are still functional? What about spending money on baseball season tickets to bond with loved ones? The answer depends on how we define “making sense.”
If we only consider spending as little money as possible, then the answer is probably no. However, if we broaden our perspective to include our overall life goals and desires, then there may be scenarios where it’s worth it to splurge. These are what we like to call “smart splurges” – financial decisions that may not make sense for someone else but are right for you. By taking the time to understand yourself and your finances, you can make these decisions with confidence and intentionality.
To ensure you’re making smart splurges and not falling into ill-advised spending, it’s essential to know your priorities and have a clear understanding of your financial numbers.
Knowing your priorities involves identifying your values and what truly matters to you. By pinpointing your values and goals, you can use them as a guide to make financial decisions that align with your desires.
Establishing a meaningful and impactful goal is also crucial. This goal acts as a barometer to evaluate the opportunities that come your way. It helps you determine whether spending money on one thing is worth sacrificing another. Having a big, meaningful goal provides tangible motivation and ensures your choices support your values.
On the other hand, knowing your financial numbers is vital for making data-driven decisions. This involves planning for predictable expenses and understanding how a particular decision will impact your key financial figures. By incorporating cash flow forecasting and recognizing predictable events, you won’t overlook important factors when making major financial decisions.
Lastly, it’s important to be an investor rather than a gambler. Instead of chasing quick gains, focus on creating a comprehensive plan that aligns with your goals and values. Only then should you select investments that support that plan. Avoid the temptation to make investment decisions without purpose or strategy, as it can be equivalent to gambling.
In conclusion, making financial decisions that make sense for you involves understanding your unique needs and desires, as well as having a clear vision of your priorities and financial numbers. By incorporating these considerations, you can confidently make smart splurges and navigate your financial journey with intentionality.
Rees Bridges brings a unique value to the IFW as both a highly accomplished creative professional and a successful financial services executive to serve in his role as Senior VP, Marketing & Communications.
Over the last decade Rees has served as the lead marketing & communications professional for a Fortune 500 Financial Services firm. He oversaw all advisor marketing strategies, client communications, and the entire firms branding and marketing initiatives.
Rees continues to pursue his passions as a creative professional & musician for over 30 years, with an impressive profile and reputation as a designer, performer, teacher, and studio musician. Here is a little secret: He serves in the role as an international clinician for Mapex drums, Paiste Cymbals and held the record for world’s fastest drummer between 2006 and 2007.
Rees grew up in London, England and currently resides in Miami, Florida. When not at work, he enjoys spending time with family and friends, traveling, and indulging in his passions for music and creative pursuits.