The upside of constraints

While I was a semi-decent tennis player growing up, I realized around the age of thirteen that I wasn’t going to play tennis professionally. I was maybe five feet tall at the time and there was no tennis academy in my future.

This constraint was particularly helpful when it came time to pick a college. Rather than attending a D1 school where tennis would be my full-time job, I found a D2 school where I could play tennis and still be a regular college student. And as I was fond of reminding my parents, I made sure to get the full college experience!

It’s easy to chalk up unrealized dreams as failures. However, it’s often through our constraints that we gain real freedom.

Two of the more common examples of dreams vs. constraints that I see in my work involve houses and cars.

Chances are, no matter where you live, there’s a bigger house on your street with a nicer car in the driveway. We can try to avoid the temptation to upgrade but it’s always right in front of us.

Now to be clear, I’m not against bigger houses with nicer cars, but it helps to consider the constraints of our financial decisions. Here are some questions that can help with that.

1) Does this decision align with what I value, what is uniquely important to me?

This question helps prevent you from making an emotional decision in the heat of the moment. Instead, you’re now bringing awareness of your specific values to your financial decision making. And that’s how better financial decisions tend to get made.

2) Can I do this with enough financial breathing room?

Income – Savings – Expenses = Financial Breathing Room

It’s not about how much money you make. Your financial breathing room is how much you have left over after you save and pay your expenses. And the more financial breathing room you have, the better you tend to sleep at night.

3) What am I saying ‘no’ to in the future by saying ‘yes’ to this now?

This question helps temper the initial excitement with the financial reality of what this decision means moving forward. For example…

Is it worth tracking how much I spend dining out each month in order to afford this new car payment along with my other expenses?

Does having a higher mortgage payment now and adding another 5 to 10 years until our mortgage is paid off prevent us from saving enough to buy that vacation home we want?

This isn’t about right or wrong. It’s about making the decision that best serves what matters most to you and your family.

Now this exercise might make a lot of sense but it still hasn’t answered one question.

How does my neighbor afford that bigger house and nicer car?

Some combination of the following is probably true.

A) They might make a lot more money than you think.
B) They have gone through this exercise themselves and prioritized accordingly.
C) They aren’t saving nearly as much or as responsibly as you are.

And speaking from my professional experience, let’s just say the answer is almost always C.

So while we tend to view our constraints only as things that limit us, let’s not forget about the freedom those constraints can provide when we’re clear on why they exist in the first place.

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