Always Focus on the Big Picture So You Don't Have Sweat Small Stuff

Written by: Jeremy Levinn

We all probably know someone who agonizes over paying $3 for parking or won’t buy a $5 latte, but who has no problem paying many thousands of dollars more than you for rent, a car, vacations, etc.

This phenomenon and its simple (yet rare) solution were the impetus for the name of my blog. If you get the big stuff right, you don’t have to worry about the small stuff. And if you don’t get the big stuff right, no amount of fretting over the small stuff is going to matter.

This, in my experience, is the greatest value of going through the financial life planning process and creating a plan. You enjoy peace of mind that your highest priorities come first and freedom from worry about the small stuff.

What do I mean by “big stuff” and “small stuff”? It’s somewhat dependent on your circumstances, but here’s an example: Take a couple in their forties with two kids. They have the typical priorities—pay for some/all of college for the kids, retire at a reasonable age, and maintain a comfortable standard of living. This is the “big stuff.”

The planning process translates prioritized goals like these into a roadmap. What are my resources right now? How much will I need at various points of my life to realize these goals? And, therefore, how many dollars do I need to be allocating towards each goal per month or year?

Want to buy a new car? How do you know how much you can afford? Look at it in the context of your other goals and prioritize. Say you are deciding between two cars, one with a payment of $350 per month and the other $500 per month. What are the priorities that are more important than having the $500 per month car? Could you get the car without sacrificing them? If yes, then look at the things of comparable value to you. Maybe that $150 would otherwise be used for one nice dinner per month. Between the car and the dinner, which would bring you more satisfaction? Maybe the $150 per month would otherwise be saved for a year and used for a vacation.

The beauty is that there is no objective correct answer, no right or wrong. By proactively aligning your spending decisions with your priorities, you are fully engaged and can make decisions without regret or second-guessing.

Let’s take a bigger example: you are looking to buy a house. How much can you afford? $300 thousand? $500 thousand? $700 thousand? This is not a simple calculation; moving one big variable impacts all the others in the equation. Maybe buying a $300 thousand house wouldn’t give you the best school district, but the lower payments would allow you to take more vacations and even retire earlier. The $700k house would have the best school district and nicer appliances, but XX. The $500k house would be somewhere in between for cost and schools, but you would have a shorter commute to work.

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The questions to ask revolve around how much you value each of these factors – quality of schools, timing of retirement, commute, vacations, material possessions, etc.

Approached in this manner, the decisions you arrive at are yours, not what society, your parents, or pundits on TV say you should do. They are a true reflection of your uniquely personal values.

It’s that simple. Once your top priorities are taken care of, the rest is gravy. Buy your morning latte. Splurge on a nice dinner. Treat your friends. Even take a vacation. When your highest priorities are accounted for first and you’ve stopped