When it comes to making big financial decisions, it’s crucial to weigh the costs and benefits. Often, we get so caught up in the potential benefits that we overlook the costs. This can lead to disappointment, especially if we’re banking on our income always increasing. This isn’t always the case, and if we spend based on this assumption, we might end up with things we can’t afford.
I once wrote about this in a post titled "The Second Biggest Financial Mistake You Can Ever Make". I argued against the idea of always expecting a pay rise. This mindset can be harmful to your long-term wealth. If you’re always expecting more, you might not feel the need to explore other ways to earn money.
I received a response from a reader, a lawyer, who disagreed with me. He believed that employees should always get paid more, regardless of the economic climate. This difference in opinion shows how people can have different views on capitalism.
I also shared my decision to forgo $12,500 in MBA tuition reimbursement. I’m grateful for the reader’s feedback, as it inspired this post.
The reader disagreed with my stance on the New York Times’ 1,100 unionized workers asking for a pay raise. He argued that the company’s stock price and the $150 million spent on a stock buyback in February 2022 shouldn’t affect the workers’ pay. He suggested that the money spent on stock buybacks and dividends could have been used to increase the employees’ salaries.
He also criticized my decision not to ask for MBA tuition reimbursement, calling it "dumb". He argued that I was working for a global investment bank that would have benefited from me getting an MBA. He believed that I had allowed the bank to commit wage theft.
The reader’s response was passionate and made some good points. However, I wasn’t attacking the Times employees. I was simply pointing out the risks of going on strike during layoffs.
Executives and employees often have conflicting interests. Executives want the share price to increase because their compensation is mostly in stock. Employees, on the other hand, want better compensation and benefits.
The reader also commented on my decision not to ask for tuition reimbursement. I believe that this decision helped me earn at least $1 million more. I applied to UC Berkeley’s part-time MBA program as a backup plan in case I was laid off. I was working at Credit Suisse at the time and was aware of the lack of job security in the finance industry.
I decided not to ask for another semester of tuition reimbursement because I didn’t want to give my manager more paperwork and potentially jeopardize my job. I was making enough money to afford full tuition, and I was afraid of getting laid off.
In the end, my decision paid off. I survived the lost decade, got promoted twice, and earned more than the $12,500 I had lost. I was laid off in 2012 with a severance package that covered five to six years of living expenses.
Emotional intelligence plays a big role in making financial decisions. It’s important to consider the bigger picture and not just focus on short-term gains. Sometimes, it’s okay to lose. You don’t always have to optimize every dollar. Peace of mind and convenience can be more valuable.
Before making any financial decision, always do a cost-benefit analysis. Be thorough and consider all the potential downsides. This will help you make more informed decisions and minimize regret.
The economy is currently unstable, with banks collapsing and layoffs increasing. It’s important to be careful and add as much value as possible to your work. Don’t ask for too many benefits and keep your head down.
I’d love to hear your thoughts on this. How do you make financial decisions? Have you made any poor decisions or sacrifices that turned out well? Would you have applied for $12,500 of tuition reimbursement?
