Your Answers to These Questions Will Determine Your Financial Future

Yesterday I saw an old friend, with his new wife. I love them both. I don’t think either would mind my saying they’re a bit of a mess.

They met living on opposite sides of the country. She is super connected to home, and he found a new home out west. Shortly after getting married, he agreed to move back east, about an hour away from their respective families. Far enough for a little independence.

As we sat around the brunch table, I nudged them a little (I am curious, but I also want them to feel supported by their friends, and to make choices that will work for them). While in good humor, they clearly have a lot on their minds. The most consoling advice I could give them was to give themselves a break, and acknowledge they are considering and making a lot of big choices, the big choices, all at once.

Taking a step back, I realized this actually is going on — in different ways — with several people I know. So what are these big choices, and how do they matter financially?

How do you make money?

(Note: This is about how you make money, not how much money you make.)

I’ve run into a lot of young people lately who are going to college with a very clear idea of who they want to become. I am so impressed by these people. This was not my experience.

When I talk to people about careers, I focus most on encouraging the intersection of passion and craft, of knowing yourself and being brave. There’s a lot of room for interpretation in this advice, but I think applied creatively, it can apply to a wide range of people. My uncle, for example, was a union machinist for most of his career. His other passion was building houses. One paid OK, the other funded his retirement and gave him a creative outlet.

This brings up another point. If your job doesn’t make enough money to pay the bills, find ways to use your talents that do. My dad is the CFO of a mortgage company in Houston, but I’m currently suggesting he take a job as an Uber/Lyft driver as a transitional job as he considers ‘retirement’ to the far-higher-cost San Francisco. He loves to drive, and it’s a great way to get to know a new city. It’s less scary than coming with nothing to do.

It can be really hard to understand the value of your skills and talents, to feel lost. Just keep at it. The only one paying attention to the clock is you. Your happiness doesn’t depend on you getting anywhere first, just in getting to your right place.

‘Retirement’ is a byproduct of how you answer this question. Income inequality and poverty relate to the systemic ways in which access to the options here are limited.

Do you share your life with another person?

This is always a choice, though luck has a lot to do with it. It’s important to know how capable you are of sharing a life, of compromising. It’s not for everyone! If you do decide to share (and however you decide to share), what are your expectations for how you spend your money and time? This becomes (at least) doubly complicated, as you might imagine, with another person. Are you on the same page? Talk about it in the present but forecast as far as you can. It’s not as important to agree as it is to talk it through. Try this if you haven’t already.

Where do you live?

My personal favorite, as well as the one that torments me the most.

Housing is complicated — it’s about the economy and culture of a place, as well as the physical environment that works best for you. I’ve moved around a bit. I know that I don’t like cold or suburbs, that I prefer cities but the quieter mixed-income residential parts of cities walking distance from good neighborhood restaurants. I like to be around people who ‘get it.’ I also work mostly from home and like to have space to have people over. My husband (remember him, the one who makes things doubly complicated?) loves to host and is the son of an architect. He also grew up in New York and ‘requires’ less space.

This has all become increasingly complicated in the Bay Area. In other words, you may have to move to a lower-cost location to have the life you want.

For most people, housing is their number one expense. ‘How much house can I afford?’ calculators waaaaaaay overstate how much you ‘should’ spend on a home. Can does not equal should. Conventional wisdom says to spend no more than 30% of your pretax income on housing (aka 3x your annual income). This is sort of OK/fine if you’ve already figured out your career and having kids and your kids’ schools. And you’ve paid off all student loan and other debts and, if partnered, everyone’s cool with committing to stable incomes (assuming you’ve figured out how to make money) over the term of your mortgage.

For the rest of us mere mortals, spend less. Ideally, as little as necessary. Opt for less space or seek out an up and coming neighborhood. Commit to building your community. Be a little adventurous and you may surprise yourself. I love how the Tiny House movement is taking this on.

Also be aware that needs change. Five years ago my kids were tiny and needed less space than we all do now that they are bigger (you should smell the feet on my 2nd grader). You don’t have to make a 30-year decision just because your mortgage suggests it.

(I have a big post brewing about the costs of renovation. Would love to hear from you if you have specific questions or thoughts on this.)

Do you have kids?

There are many ways up this particular mountain. Personally, I was more confident in my need to have kids than in my need to be married in the traditional sense (I’m a child of divorce, what can I say?).

Kids change everything.

The most maddening thing about this is that you don’t actually know how they will change you until they do. From a practical perspective, they change how you think about the space you live in, where you live, and how much you work. How much each of you work, if you’re a couple.

All of these have direct financial implications. We moved from New York to San Francisco. Went from having equally big careers to having one stable one and one more flexible one. We moved from the more established side of our neighborhood to the more speculative side because it’s where we found value for money in the house we wanted to live in.

When advising people on the cusp of having kids, I urge the most conservative choices possible, to be open to the following reactions: one person choosing not to work, or other serious work reductions in response to having a family, change in location for schools or other cost of living reasons, (hard to know this before your kids are at least 5), change in location to be near family or other caregivers (increasingly change of location is for family/caregivers).

I would never have predicted changing my workaholic ways in favor of working a more flexible schedule from home. It happens. And it feels powerful to be able to articulate your priorities.

A lot of people get caught up on the ordering of these big questions. I’m not sure how much you can manage that part, or if it makes sense to try.

In the case of my friends, their strife is that they’re making all of these choices at once. Taking any one off the table would probably make things feel calmer, like there was one less thing to worry about.

It may be counterintuitive to argue for resolving the kids question first. I understand wanting to be stable, or feel stable, before you have kids. But on the other hand, kids ground who we are and who we want to be like nothing else. They re-raise the questions of work and home regardless (and do so over and over again).

Not the advice you get from Cost of Living or How Much House Can I Afford Calculators, I know. But life is complicated. It’s time to acknowledge that these choices are more than financial.

Need money/financial relationship advice? Email me. Want a better financial app? Subscribe to the Good Money mailing list to receive updates about our progress.