There are many seemingly non-financial decisions that can impact your entire life in areas such as earning potential, debt and so on. In this article, we'll look at three such decisions that people should take more seriously (from a financial perspective) than they usually do.
You can know budgeting back and forth, plan your retirement when you are in the womb and still end up broke at 40 when a divorce takes half your assets and saddles you with payments for the rest of your life. Who you marry is one of the biggest factors in whether you will be in good financial shape later in life. Although there is no such thing as a good divorce - as even an equitable one costs money in legal fees - simply staying married doesn't guarantee financial success either. From a financial perspective, it is important that you and your partner have similar attitudes when it comes to money and a shared vision as far as financial goals are concerned.
There are many questions to answer when you are making a lifelong commitment to someone, such as whether you want to have children, whether both of you will continue to work and what you want your future to look like financially. Do you want to travel while you are young at the cost of working longer? Do you want to retire early? Is running a business one of your dreams? There are no right or wrong questions or answers, but it is a good idea to start these conversations early to avoid problems after you are already married.
With the advent of contraceptives, having children is truly a choice, and one worth careful consideration. No parent considers a child from a cost perspective, but in order to give your child the best upbringing you can, it helps to have a solid financial base. For many couples, having a child means the loss of an income for a period of time and a rearrangement of financial priorities for a decade or two. There is also an increasing chance that you may end up supporting an adult child well into his or her 20s, as post-secondary becomes more and more common. That said, finances should not be the deal breaker in the decision to have kids. Instead, once you have decided to have a child, you should re-evaluate your financial priorities sooner rather than later.
For most people, their post-secondary education ideally sets them upon a career path. To make a proper decision about what degree to pursue, prospective students need a clear picture of their earning potential and the market demand before sinking thousands of dollars into a field where prospects may be weak. There are market signals, as trade apprentices who pay very little to their education costs can attest, but the information out there is often willfully ignored.
While it is great to follow your heart, the economics of career choices need to be part of that decision. True, a four-year degree may be fulfilling, whether or not it translates into better career prospects, but most people cannot afford to lose the time and money without some type of financial return. Evaluating potential degrees against the job market can help filter your choices and reduce the chances that you will end up going back to school to study something more practical. At the risk of sounding like a sellout, it must be said that many people find rewarding careers in fields that need workers and delegate their interests to a hobby that their regular job supports.
The Bottom Line
None of these decisions should be considered as being purely financial, but there are real consequences to ignoring the financial side completely. Whether it is marriage, kids or a degree, taking your time to consider the decision from multiple angles – including the financial angle – will give you more confidence that you have truly made the best choice you possibly could have. And in the end, that is all we can ask for.