What makes the most financial sense on paper isn’t necessarily what makes the most sense for your life.
In your area right now, it might be cheaper to rent than to own your home. But ownership has many psychological benefits that might make it worth the cost.
It might make more financial sense to invest rather than to pay off your low-interest student debt faster. But maybe having that debt really stresses you out and you want the sense of satisfaction that will come from finally paying it off in full.
The work I do with clients is about exploring the different possibilities and figuring out the financial impacts of going down different paths. The more clearly you see the alternatives, the better able you’ll be to make the best decision for you.
The goal is to make informed decisions.
Sometimes doing what makes the most financial sense will be the obvious move, like if you can invest in a way to pay fewer taxes over the course of your life, or if you can get the same thing for less money.
But other times there will be tradeoffs that need to be weighed and measured. Or there will be practical considerations that need to be accounted for. A plan can’t just make sense in theory—it needs to be practical and work well in the real world.
In the end, making good financial decisions isn’t just about maximizing your net worth, anyway. It’s about making the most of your money.
Money is a means to a whole bunch of different ends—spending your time the way you want to spend your time, living where you’d like to live, travelling where you want to travel, making sure your kids have good opportunities and that you have enough money saved to feel secure.
Building a financial plan is about taking all of these things into account, not narrowly focusing on what makes the most sense on paper.