A US financial planner messes up his finances. Could be any S’pore property “owner” with a mortgage.
The experience has changed just about everything about how I do financial planning and the advice I give in public … I’ve … learned some things about risk. Risk is an arbitrary concept, until you experience it. And I’ve noticed myself focusing more on the consequences of something going wrong than just the probability of that happening. As a result, I tend to urge my clients to make decisions that err on the side of caution.
… For one thing, I am less quick to judge other people’s financial behavior. I’m also more inclined to take into account personal factors that determine how people behave around money.
… The process of making financial decisions is about more than building a spreadsheet to calculate the answer, because life rarely fits cleanly into a spreadsheet. Our decisions often appear irrational until we understand the whole story.
I have a friend who is going through a tough time financially. He has a high income, but is burdened by debt from a few real estate deals that went south. He continues to take fairly expensive ski trips. That would seem irresponsible in his situation, and maybe they are.
But I now realize that it is not that simple. Maybe those trips are keeping the guy alive, or saving his marriage or keeping him sane enough to work.
I have another good friend who borrowed against his house to pay for a therapist. Unless you were walking in his shoes you might think that was stupid, but it saved his life and changed his career. It ended up being one of the best investments he ever made.