Numerous everyday decisions can have a deep impact on your household’s finances. You could be quite surprised how much influence your day-to-day choices have over your current debt, potential future earnings, and retirement.
Financially sound households tend to consider the short and long-term potential impact of all financial decisions, including those that have nothing to do with money.
These 3 key non-financial decisions can have a large impact on your financial life:
1. Getting married
Getting married should be among the happiest times in your life, but marriage can have a significant effect on your finances. Choosing the right partner is paramount. A divorce can remove half of your assets and potentially create payments to your ex for the rest of your life depending on the settlement.
● Marrying a suitable partner is actually an important determining factor in your future financial situation later in life. The ways in which your spouse could alter your finances are innumerable.
● Staying married no matter what, likely won’t result in financial success either. Before getting married, consider the spending habits and current debt load of any potential spouse.
● There are many other factors to consider, too. Do both of you want children? Will you both continue to work after having children?
2. Educational decisions
Medical or law school should result in a much higher income than an English major. Higher education isn’t the perfect choice for everyone, but it’s something always worth considering.
● Reflect on your passions and the things you love to do, but don’t ignore the economic implications of your potential decisions. Consider more than the financial costs of education. There will also be an investment of time. Always consider the demand for workers in your chosen field and whether the demand is growing or slowing.
● Consider the effect of work-related stress on your family and home life as well as your overall health. A high-paying job with long hours and high stress may not be worth it over the long term if it shortens your life or ruins your relationships.
3. Having children
Children might have the greatest impact your long term financial situation. Raising a child to adulthood is very expensive. Your financial priorities must change drastically when you have kids.
● The money spent raising children cannot be used to save and invest. Food, clothes, medical bills, and educational expenses associated with children will add up. That money could have been put towards retirement.
● Thanks to government intervention, the cost of higher education continues to rise. How much will a bachelor’s degree cost in the future? Will a bachelor’s degree be akin to a high school diploma by then? Make the necessary financial adjustments now.
Just about every single decision you ever make will have financial implications. The partner you marry, education you pursue, and whether you have children can potentially change your financial future in significant ways.
Success isn’t about making the perfect choice every time, but rather about refraining from making a single catastrophic choice. Take the time to make informed decisions. Your financial future depends on it!