I’ve done financial planning for all of my personal life and investing professionally for most of my professional life. But in the five years since my husband and I got engaged, I started to feel like my plan and reality were getting further and further apart as we watched property prices in Hong Kong appreciate 10 to 15 percent a year—a rate that’s held steady for the past ten years.
We have friends (people younger than we are!) who got engaged a few years before we did and who bought "the starter family home" when they got married. By the time we got married, it would have cost us 30 to 60 percent more than they spent to buy a similar home!
Even someone who does financial planning and investing professionally can get frustrated when the real world goes in a direction that the plan didn’t anticipate. I assure you: this kind of uncertainty happens to everyone, and you shouldn’t let it get in the way of planning out how you want to reach your financial goals.
Won’t things just change? What happens when reality invalidates my budget?
I get asked these questions, or some variation of them, at least once a week. Usually it’s a prospective student who’s wondering if financial planning really works and what happens when you can’t plan for unexpected events… like a property market that goes up between 10 and 15 percent a year instead of the expected three to five percent.
The fact is that you’re a lot better off planning and adapting to change than not planning and failing to get even close to your financial dreams and goals!
My husband and I watched other people reach "the family home" ownership milestone way before we did. We could have compared ourselves to them and asked “What’s wrong with us?”
That’s the wrong question.
The fact is that we both had planned carefully. We had bought our own small bachelor/bachelorette apartments. Of course, at the time, marriage wasn’t in our plans and we couldn’t have anticipated the huge property appreciation that would happen in Hong Kong, which made it relatively unaffordable for us to trade up when we got engaged.
I admit that I did ask why neither of us were willing to take a little more risk and buy a bigger apartment, since we were already thinking of getting married at some point. Many of our peers bought at record-high prices five years ago. They’re doing well, because prices continued to climb.
I also know many finance professionals who didn’t buy a home because they thought property was too expensive. Maybe they bought a small apartment for some exposure in real estate, as a properties investment, but they rented their main apartment—and have been for the past 10 years. And they’re perfectly happy.
The truth is that the timing wasn’t right for us.
We weren’t ready to buy a property when we got engaged, given the increases that had already happened. We both worked in finance and we simply weren’t prepared to take on a 50-percent-down mortgage for a larger apartment. We both still had our own loans to pay off. We didn’t want to start our marriage heavily in debt. And I didn’t want to be chained to my career as portfolio manager just to afford the mortgage. We wanted the financial freedom that would come from not taking on more than we could manage.
So my husband moved into my apartment. We were happy to stay there until we figured out our next move.
It’s tempting to beat up on yourself for not reaching the next life stage as quickly as someone else or for being behind with financial goals and planning. To get frustrated that you aren’t moving forward faster. To compare yourself with everyone else and find yourself coming up short.
Have you ever found yourself saying…
“Everyone else has a larger home...”
“Why didn’t I buy a larger home knowing I’d get married or want a family one day?”
“She’s made so much money from her apartment purchase…”
“She’s making three times what I am because she started her businesses at the right time…”
“We both started jobs right after graduation and she’s so much more successful in her career…”
These observations are not productive! I encourage you to stop comparing and start focusing on what’s right for you.
We all move at our own pace. There is no one right way or speed at which to approach reaching your financial goals.
You might hit one milestone 10 years before your best friend and another 10 years after she does. The fact that you planned means you’ve already put in the effort. You can’t blame yourself for market changes or life changes. What you can do is pay attention and adjust course when needed.
Everyone’s vision of what they want in life is different. Everyone has a different risk profile. Some women feel comfortable buying an apartment with 90 percent debt while others would never take on that large a liability.
A healthy and successful relationship to money and investing is different for everyone. We all measure opportunity costs differently and come up different ways of analyzing costs and benefits.
It doesn’t matter if you’re still living with a roommate when you’re 30. Or if you started a retirement account when you were 18. Or if you changed careers at 40 and had to start over at the bottom of the corporate ladder. Only you get to decide what timing is right for you.
So, if you have a big vision and a big goal, be patient. Appreciate where you are right now, while continuing to work toward your goals. Once you’ve planned and done the cost-benefit analysis, you’ve done your best. You can’t worry about how far along anybody else happens to be.
Last year, my husband and I decided to rent together for the first time. We found a bigger place to rent for ourselves that is absolutely perfect and rented out my place. We are still waiting to buy a larger home until it makes sense financially and feels right emotionally—but that’s okay, because our financial planning has put us in a position to understand exactly when that will make sense for us.