Make Tough Financial Decisions With The Help Of An Emotional Balance Sheet

Make Tough Financial Decisions with the Help of an Emotional Balance Sheet

There are a lot of financial decisions that come down to so much more than numbers. Sometimes the emotional benefits of something far outweigh the financial ones, and an emotional balance sheet can help you determine that when things get tough.

Photo by Quinn Dombrowski.

Carl Richards at The New York Times recently looked back at the decision he and his wife made about her being a stay-at-home mum. All in all, he determined that his family missed out on over $US1 million of income, but it was worth every penny. Now, Richards has a new section in his budget balance sheet for things that have high value despite having no monetary value (or costing money):

I simply want us all to become aware of the need to write down our choices and assets even if they seem to defy calculation. Think of these items as lines on your emotional balance sheet… You could easily conclude that having children is always a bad financial decision and be right — mathematically. Except for the little issue of the value you place on having and raising a family. That value won’t fit neatly and numerically into any traditional asset or liability column, but it will fit on your emotional balance sheet…. If we limit our view to what can be measured in dollars, most of what brings us happiness could be defined as bad financial decisions. Travel, time with friends or long meals with parents could all qualify (or be disqualified, as the case may be), unless we’re also weighing the benefits that we can’t enter into a calculator. Real financial planning must acknowledge that reality.

You may not be able to quantify things like love, family or experience, but there’s no denying the value of those things. As you go over your budget, add all of your “assets” with emotional value. You don’t have to put a price on them, but if it helps you, label a rough estimate of what those things are worth to you. The next time you have to make a tough financial decision consult your budget and your emotional balance sheet to help you decide. The whole article is well worth a read, so check it out at the link below.

An Emotional Balance Sheet Can Guide Hard-to-Quantify Financial Choices [The New York Times]

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