A fair amount of financial advice hinges on the belief that we have the power to control our financial situation, but is that true? How much of our financial success is attributable to our decision making and how much is determined by our circumstances? Are we making smart decisions, or is our prosperity circumstantial or even pure dumb luck?
To answer these questions, I took a hard look at my path to financial success. As I replayed the events, I wondered, “would I be a millionaire if I tweaked a few pivotal moments in my life?”
Do you ever play the “what-if” game? You know, the game where you ask yourself what might have happened if you made different choices throughout your life? What if you chose another career, studied abroad, or took a year off between high school and college? What if you married your first love or didn’t get married at all?
How might your life be similar or different? Would you have the same friends you have now? Would you live in the same place?
Think about pivotal decision points you’ve encountered and then envision an alternative life.
Now let’s think about money for a moment. How would your finances change if you altered a few of these decision points? Would you have a higher or lower net worth?
After you play this game for a bit, change the focal point. Rather than thinking about circumstances under your control, think about those you had little to no control over. How have those altered your financial well-being?
Many of us ask these types of questions when life doesn’t go as planned, but we fail to reflect upon them when things go well. Is our success a direct result of our financial decisions or is there more to the equation than that?
How Circumstances Affected My Financial Success
For years I thought my financial success was entirely within my control. Every dollar I saved was proof of the time and attention I spent thinking, planning, and dreaming about money. I told myself this story over and over again, but my narrative wasn’t entirely accurate.
Sensible decisions helped make me a millionaire, no doubt about it, but they had less impact than other events and circumstances of my life. External factors played a significant role in my accomplishments and success.
To discount them is a disservice to anyone aiming for financial success.
How My Parents Affected My Financial Success
Whether we like it or not, our families and past experiences impact our current financial situations. Growing up, my best friend’s parents didn’t attend college, nor did anyone else in her family. As a result, she didn’t apply to any schools her senior year.
She didn’t have anyone to guide her through the application process or stress the importance of higher education. No one explained how to fill out financial aid forms or scholarship applications either.
So, rather than going to college, she began working in retail, where she will most likely work for the rest of her life.
My parents stressed the importance of college from a very young age. I never considered the alternatives. College was not really a decision point for me. I didn’t decide to go. Instead, I considered it my destiny.
I chose to attend a state school, but I didn’t choose it because of the lower tuition. When I was eighteen, future financial obligations never crossed my mind. I simply lucked out and fell in love with a school not too far from my parents’ home. I applied to plenty of other schools with much higher tuition rates but ultimately decided against them.
How Timing Affected My Financial Success
I graduated at the height of the dot-com era. As a result, I stumbled out of college and into a bustling economy.
Yes, I studied hard, racked up internships, and gained as much work experience as possible before grabbing my diploma, but it was easier to find work in 1999 than in 2020.
If I graduated at a different time, I might not have switched from marketing assistant to software engineer. The opportunities that presented themselves when I was young aren’t as readily available today.
The ability to hit the ground running isn’t an option for many of today’s college graduates. I succeeded, in part, due to lucky timing.
How a Partner Affected My Financial Success
In college, I met the man who would become my husband. Two years after graduating, I bought my first house with him.
Without that relationship I wouldn’t have bought a home at twenty-two. Who knows when I would have felt comfortable covering a monthly mortgage payment, property taxes, and utilities on my own.
My husband and I didn’t make a ton of money right after college, but our salaries rose quickly, and we both reached six figures in record time. Having two salaries pushed us to new heights. It would have been much more difficult to grow my net worth alone.
My husband’s earning power improved my financial outcome dramatically. This blog is called One Frugal Girl, but it should be called One Frugal Girl and the Guy She Married. Make no mistake if I remained single or even married someone else, my net worth would not be as high.
I didn’t marry my husband for his income, but that decision had lasting financial implications. Sure, you can bring in a roommate to help pay for expenses. But there is a big difference between living with someone you love and living with someone to decrease your monthly costs.
Living as a dual-income couple without kids for over a decade significantly impacted our bottom line. I decided to marry my husband, but surely I cannot pat myself on the back financially for making that choice. It was pure luck that I fell in love with a man who earns six figures.
There is simply no way I could have reached the height of my financial success without my spouse. If you are married or in a partnership, it’s easy to discount your relationship’s impact on your finances.
How Medical Insurance & Short Term Disability Affected My Finances
In 2005 I experienced a horrific medical situation that took months to diagnose. As I scheduled appointments and underwent diagnostic testing, I racked up over $60,000 worth of medical bills.
I shudder to think what would have happened to my finances if I was unemployed, self-employed, or unable to pay for insurance at that time. Thankfully, medical insurance covered those costs with minimal co-pays or out of pocket expenses.
Thanks to FMLA, I was able to leave my job for five months after surgery. Rather than rushing back to work, I had time to recover mentally and physically.
Short term disability also covered my salary during my five-month absence. Without that policy, it wouldn’t have been easy to cover our bills and mortgage.
Up until the time of that medical emergency, I was thin, healthy, and fit. I had never been to the hospital or encountered a major medical issue in my life. I had no preexisting conditions, and I was in good shape.
When choosing my employer, I didn’t worry about the type of medical insurance provided or the short and long-term disability options. I was lucky to have a job that covered me.
When chronic pain and other medical problems continued, my husband and I used our high salaries to pay for alternative treatments. Our medical insurance didn’t cover those extra costs, but I was willing to pay anything to alleviate my pain.
I never had to question the decision to visit a doctor or seek help. My finances allowed me to seek the care I needed without ever doubting my decision or myself.
After my short-term disability plan ended, my employer made special accommodations so I could work from home. If I worked in a different industry or career, I might not have continued working.
I decided to explore a high-paying career, but I didn’t think about short term disability or medical coverage when I took that job. My benefits package was a lucky perk.
Decisions Versus Circumstances
Over the years, I’ve taken my life circumstances for granted. What if I was raised by parents who didn’t stress the importance of college? Would I have navigated the school application process alone?
What if I didn’t meet my spouse when I was young? It would have taken much longer to save and wait for compounding to take effect.
What if I didn’t have a job that paid for medical insurance, short term disability, and enabled me to work from home. How different would my finances look?
Financial experts often make judgment calls against those without. You see quotes like, “Why don’t people in debt just stop eating out?” or “Why do they go to Starbucks every morning?”
While our decisions certainly play a role in our financial outcomes, much of our success comes down to our circumstances, our families, and sometimes just pure dumb luck.
Some Decisions Aren’t Really Decisions At All
What does this exercise prove? It proves that we don’t have as much control over our finances as we think. Perhaps we have been graced by good fortune, that doesn’t mean that everyone else has had the same ride to financial success.
As a personal finance enthusiast, it’s essential to be accountable for the decisions we can control, but also recognize that we cannot govern every aspect of our future financial success.
Financial experts love to blame those who can’t manage their money, but making different decisions isn’t always the answer. Some of us simply have different circumstances presented to us.