Making difficult financial decisions can mean many things to different people. Equally, for some it can weigh very heavily, whilst others find it much easier.
So, what influences our ability to make those tough decisions?
There is no doubt our parents and our childhood will play a large part. If you were brought up in the same house throughout your childhood and your parents didn’t change job you are likely to be more risk averse.
How your parents handled financial matters, if money was in short supply, where you went and what you did, will all have affected you.
Spending time reflecting on what you would like your life to look at can be a very helpful way of starting that financial decision making process.
If you’re a very visual person sign up for a Pinterest account and “pin” pictures of places you’d like to visit, houses you love, cars you’d love to own and so on. Or make a mood board to put on your wall, or stick pictures in a scrapbook.
Something else many clients enjoy doing is writing in a journal. Not only can that create clarity around decision making, but it can also help you formulate what you’d like your future to look like. And there’s nothing wrong with a good pros and cons list!
What constitutes a difficult financial decision?
Again, that depends on the person.
Should you downsize and move to a smaller property? Would you enjoy having less living space that is easier to maintain, or would you feel trapped? Would you like to be able to have family to stay? Does reducing your household bills appeal?
Both downsizing and upsizing is largely driven by needing to free up money or being comfortable to take on additional debt. It isn’t a decision you can make in isolation. Not only do you need to involve your partner, but you also need to consider what other outgoings you have and your income moving forward.
Should you pay off your mortgage? I have talked about this one before, so you know my feelings on it. But again, it’s up to you. If you’d like to reduce your outgoings and have total peace of mind, that’s one way to achieve it.
Can you afford to support your children or grandchildren being privately educated? This is a big decision, as it is not only school fees you need to consider. Uniform, resources, trips and extras can soon mount up. You will need to consider the length of time your children are likely to be in education, and what happens when it is time to move to further education and university. You will probably want to counter the financial decision with the opportunities it may give your loved ones in the future.
Choosing to change job or even a career is another big decision that is often financially motivated. However, the last couple of years has caused many of us to also reflect on our level of happiness too. I have had many clients who have chosen to take early retirement, because they just don’t want to be part of the rat race any longer.
Making wise investments and planning what you want for the future should enable you to enjoy your life. As you know, I am also a huge fan of enjoying the life you live right now, rather than always waiting for “one day”.
I believe you should make your financial decisions with an eye on right now, as well as the future. But equally, you should review your financial life plan on a regular basis. It’s not written in stone and it needs to serve you now, and moving forward.
If you would like some help with financial life planning and making those tough decisions, let’s arrange a chat – 01344 875 310.