Financial planning, and its emphasis on long-term cash flow and preparing for the unknown, extends beyond the realm of your bank account and investment portfolio. It’s a mindset, a way of looking at the world.
For instance, the backseat locks of my car haven’t been working properly. They didn’t respond when the remote clicker was used, and the doors could only open from the inside. While it was a slight inconvenience to my passengers, the broken locks didn’t affect the ability of my car to do its main job: get me places.
I thought about postponing the repair until things got worse, but in the end, I brought my car to the repair shop this week. Why did I choose to pay if maybe the repair wasn’t absolutely necessary?
Several factors motivated me to make the time in my schedule to visit the mechanic:
I guessed that this relatively small problem would be cheaper to repair than if the loose parts in the door continued to rattle and eventually broke something else. Furthermore, an unsuspecting passenger might pull the door handle too hard, causing it to fall off. (In fact, this happened, and it cost meNIS650 to replace a broken car door handle.)
In case the car was in an accident and the passenger needed help exiting, the emergency personnel would lose precious minutes in figuring out a solution to the door not working properly. Money shouldn’t be the obstacle when someone’s life is at stake.
If the car doors didn’t lock properly, the alarm system might be compromised. Surely the cost of replacing a car (even with a good car insurance policy) is more than the cost of repairing a broken locking mechanism – not to mention the lost time dealing with police reports and shopping for a replacement.
Since being “penny wise and pound foolish” can be expensive in the long term, I thought it was wise to bring the car in for non-essential repairs. Just as I seek to minimize risk in my portfolio, I sought to minimize risk of greater repair costs and the potential for personal injury. The next time you have an auto tune-up, consider driving afterwards to your financial planner for a portfolio tuneup.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published May 20, 2012.