Saying ‘No’ Is Not Very Good Financial Advice

Barry Ritholtz, a financial columnist who runs his own financial planning firm, writes in the Washington Post about why advice like, “Never buy a boat” is unhelpful because it doesn’t help you understand whether you can actually afford something like a boat, and whether owning something like a boat would be worth it for you. He writes:

Merely saying “no” is not financial advice; it is a form of blind risk avoidance. The problem with such advice is twofold. First, it misunderstands the purpose of money. Second, it fundamentally misses out on the best way to make intelligent financial decisions.

Money, for all its glory and the trouble the blind pursuit of it has caused, is misunderstood by many. No, money is not the root of all evil. The problem is people and how they behave around it.

Money is merely a tool, a medium of exchange. Its value is that it allows its owners the freedom to make decisions that those without it cannot.

At its most basic level, money allows sustenance and security: Food, housing, clothes, medical care and transportation. Get a little more of it and you can pay for your kids’ education, and take a vacation now and again. Freedom from worry is a nice benefit of having enough to cover the above. If you’re fortunate to have more than enough, then other choices emerge: philanthropy, entertainment, hobbies, travel, whatever indulgences catch your fancy.

So let’s go back to Ritholtz’s boat example: Sure, for someone like me, buying a boat makes no sense because a) I can’t afford it, b) Even if I wanted one, I don’t know anything about the cost of owning and maintaining boats, c) If I decided I really wanted a boat and futzed with my finances so I could buy one someday, I know that I would also not use it very much to make the cost worth it, which means it’s not a very practical purchase.

But there are people who do want boats and understand the costs and responsibilities involved; who make the financial decision to buy one and their lives are better for it. Now that I think about it, I have a friend from college who saved money to buy a small sailboat by working weekends as a sailing instructor and owning a boat made perfect, obvious sense for him because he loves sailing and knows all the ins and outs of what it means to own such a vessel.

The Chicago Tribune’s Brian J. O’Connor puts it a different way:

Too much of money management advice is all about saying “no,” Keeffe says. You can’t have a vacation if you’re paying off student loans. You only get to keep what’s leftover at the end of month instead making your savings goal a priority of some kind, even in a small way.

In other words, instead of saying no to something you want but can’t afford, say yes, and then start saving for it.

O’Connor quotes Carol Keeffe, the author of How to Get What You Want in Life with the Money You Already Have (what a title!):

Keeffe knows that it can seem childish or inconsequential, but scraping up $3 a day equals more than $1,000 a year. At that rate, you’re bound for Paris in four years. And if that seems like a long time, consider this: In 2019 you can be four years older, or you can be four years older and going to Paris.

Let’s all be four years older in 2019 and doing something we wanted to do because we said yes and started making financial plans for it now.

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