A common refrain in the personal finance community is “personal finance is personal.” I think that this idea is absolutely true. We all have different values and responsibilities, different ideas about what constitutes a worthwhile splurge and what we would never in a million years spend money on. But implicit in that statement is something that bloggers don’t discuss very often. If we’re all buying into the idea that some people value, say, travel, and they will save and scrimp and sacrifice in order to be able to take a big trip every year, we applaud them for making this choice and making the trip happen.
But what about all the stuff that isn’t getting funded (or is getting funded very minimally) at the expense of the trip? Are retirement accounts being maxed out? Is debt being paid off? Has an emergency fund been established? Unless the person has a really high income, it’s unlikely that all of those other goals are being met. At least one of them is probably being sacrificed at the expense of the trip. Economists refer to this as opportunity cost – essentially, every time we make a choice, we’re also making a choice NOT to do/buy/participate in something else.
Me? I’m not an economist. When it comes to making one financial choice over another, I look at the choice I didn’t make – the one I “sacrificed” at the expense of another – do my best to fund it as best I can, and just call it “good enough.”
I know that doesn’t sound at all profound, but it’s a big step for me. I’m very much in the habit of thinking in all-or-nothing terms, which is not a good quality, especially when it comes to finances. Putting something into savings is much, much better than nothing at all. Paying just $50 extra towards your debts can make a big difference. But I’m just not hard-wired to think that way – I commonly think things like, “I can’t make at least a $500 deposit into savings, so why bother?”
I’m starting to come around, though. I have to – as I discussed above, it’s almost impossible to give every fund and goal equal financial attention at the same time. I have to adopt a “good enough” attitude sometimes or I’ll drive myself crazy.
Right now it’s my retirement funding for the year that’s going to have to be good enough. I decided over the summer that establishing an emergency fund was my big priority and I have a lot of other financial obligations for the rest of this year. The minimal amount I’ll put towards my Roth before the year is up is just going to have to be good enough.
What’s your top financial priority right now, and what’s your “good enough”?