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A Tesla won’t scotch your financial prospects. Your recurring expenses will.

A lot of my clients fret over a large one-time expense–a once-in-a-lifetime vacation, a huge home remodel, a fancy electric car–and waste much less angst on their monthly expenses. Turns out, they’ve got it backwards.

When it comes to your long-term financial health, it turns out that expenses you incur over and over again (those pesky “monthly expenses”) often have a much bigger impact than a one-time expense, even a big one.

For example, remodelling your new Seattle condo to the tune of $100k will likely have less impact on your long-term finances than spending an extra $1000/mo in expenses.

And showing my clients this in my financial-planning software, which projects years into the future, never fails to surprise them. It even mildly surprises me every time, even though I’ve seen it a thousand times.

Even though it surprises everyone, it makes sense if you think it through: $100k once is easy to surpass with an extra $1000/mo over 20 years: $1000 x 12 months x 20 years = $240k.

(Finance pedants will get on my case about the time value of money, which is, of course, a Real Thing and an Important Thing, but I’m simplifying here to make a point. And I also already have plenty of pedants in my life, having two young children and a husband.)

There is an obvious analog with your physical health: Exercising a little each day is better for you than being the weekend warrior.

So that I don’t mislead you into going out and buying that souped-up 2018 Tesla Model X because “hey! It doesn’t affect my long-term outlook and they’re so awesome!” please remember these other factors that also influence your long-term financial success:

  • How long-term is your long-term? If you’re 40 years old, you’re going to be spending money every month for 600 more months if you live to the age of 90. By contrast if you’re already 70, then you have 240 months of spending to go.  Changes to your monthly spending are going to have a much bigger impact if your long term is, well, longer.
  • How big is your big one-time expense? If you spend an extra $100k on a home, maybe that won’t necessarily hugely affect your long-term finances.  If you spend an extra $500k, obviously the calculus is different. My post does not give you permission to go buy yourself a private island “but only this once!”
  • Is your big one-time expense leaving you vulnerable financially? Let’s say our software-powered projections show us that, long-term, you’ll be fine spending that extra $100k now. But if that expense flattens your cash reserves, it’s probably a Bad Idea.

    Software has a hard time controlling for the possibility of “My mom got sick. I have to take 3 months off to go take care of her” or “I lost my job and the tech industry just imploded. Again.” And for those unpredictable yet oh-so-likely vagaries of life, you don’t want all your extra money wrapped up in photos from that sweet once-in-a-lifetime vacation. You want cash.

What do you worry about more? Your undifferentiated monthly expenses or that big one-time “splurge”? Try multiplying those monthly expenses over the next 10 or 20 or 30 years. How does that change your perception of their relative impact on your financial future?

If you want to make sure you’re spending your time, energy, and angst on the right things, reach out to me at  or schedule a free consultation.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.

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