The Optimal Financial Performance

The textbook says to stock 15% away each paycheck into a tax-advantaged account, and over 40 years you will have enough saved for retirement.

People save far more than 15%, though, trying to reach retirement in a decade or less.

What’s the optimal choice for you?

The textbook says buy a house that’s under 30% of your income.

Others buy houses that are 20% or less than their income.

What’s the optimal choice for you?

The textbook says that people, on average, spend $3,000 on eating out every year.

Some people don’t cook at home at all, spending far more.

What’s the optimal choice for you?

The textbook says that taking out too many credit cards will destroy your credit score.

Others open and close double-digit credit cards every year, in order to maximize points.

What’s the optimal choice for you?

What’s optimal isn’t about what someone has done or what the textbook says.

It’s about your own needs and comfort with risk.

The more comfortable you are, the better chance you can step out of the textbook.

Either way, if your wants – not your needs – come first, then you’ve chosen a sub-optimal path.