Picture this scenario. Your spouse asks you about the family’s upcoming plans.
“What are we doing in the summer? I’d really like to take the kids away for a couple of weeks and see family abroad. Wouldn’t it be nice to travel around and show them all the places we always dreamed of taking them?”
“Sounds great. But you know it’s going to cost about ten or fifteen thousand dollars minimum. And that’s a conservative estimate. “
“I know but we haven’t seen everyone in almost three years. Developing family relationships is also very important and I really need some time away.
“I’m happy to put the money aside for that because I also need a break, but we are supposed to be saving up to pay for our daughter’s wedding be’ezrat Hashem. And that’s not going to be cheap either. Not only will the wedding and everything that comes with it cost money, but we wanted to help them buy an apartment.”
“Maybe you’re right but it’s so hard to make the right decisions, when we are being pulled in different directions.”
So what’s more important? How do we balance those conflicting needs knowing that both options are very important to us?
We’ve all heard stories of the frugal, sometimes called stingy, individual who scrimps and saves his entire life in order to have enough money for his retirement or be able to take some fantastic trip and travel the world. And then tragically he drops dead on his last day of work. Heartbreaking stories of people who plan and then are not able to take advantage of their planning. And unfortunately this often provides us with the justification to avoid saving and planning.
But the majority of people do reach retirement. The average life expectancy in Israel continues to rise every year. Those reaching retirement have average expected lifetimes approaching the middle eighties in Israel. So if you retire at 62, which is currently the official retirement age for women, or 67, the official age for men, you will be living in retirement for at least 15 to 20 years and quite possibly 25-30 years. How then can you justify not putting money away in savings for that hopefully long retirement? But we have to balance those savings – our future needs with our current needs. Because if we go overboard one way or the other we run the risk of not achieving both our goals, each of which are very important. So we live with this dichotomy – putting money aside for later or spending now for an important current need?
And unfortunately there is no clear cut answer.
Unlike certain areas of life where the answers are black and white, correct or incorrect, truth vs lies, these sorts of decisions can’t be classified so clearly. When we are making financial choices we aren’t making right or wrong decisions, which makes it much more difficult for us psychologically to be strong enough to choose the correct outcome for ourselves and our families. And there isn’t one right result. There could be many correct and prudent financial decisions that are reasonable and that give us an opportunity to accomplish our goals, that have a financial component to them. And no, it’s not so simple to live with that contradiction of knowing that we have to sacrifice and choose between various shades of grey. But that’s part of our financial life and we have to live with it.
Just don’t cower away from making decisions. Don’t let your money control you and cause you unlimited anxiety. This article was not intended to exacerbate your financial decision making dilemmas. On the contrary. This column was meant to get us all thinking about how our finances impact us. To get us to look deeper inside and evaluate what’s really important. And in order to do that we need clarity regarding our goals. Not only what’s important to us in the short term – this day, week, year, but what’s important to us long term because that’s the only way that we will be able to make a balanced financial decision that will truly reflect our financial values and priorities.
If you value retiring early, then start saving and cut your expenses. If you value helping your married children buy into the housing market, budget sufficient resources to give them a lump sum or consider taking out a mortgage for them. But if you don’t know what you value then how will you move closer to implementation. If you value other things, then set those priorities at the top of your list of goals and plan appropriately. Integrate the critical values into your plan and prioritize related decisions so that you will be able to successfully make financial decisions to support that lifestyle.
We can’t have it all. Acknowledge that fact, and also recognize that it’s okay to have different forces pulling us in different directions. But that knowledge doesn’t absolve us from prioritizing and setting our goals straight so we can decide how to divide our resources.
Work on achieving the clarity of what is important to you and then you can move forward. BeHatzlocho!