The Million-Dollar Decisions You're Making Without Thinking About Money
Life Decisions Are Financial Decisions
This is going to be a controversial post. I’m just a guy on the internet, so you’re welcome to ignore it and move on. However, if you take the time, I think it might be insightful to see how we sometimes lose money because we never even think about it.
We can spend countless hours optimizing our coffee purchases, comparing phone plans, and hunting for the best deal on a new TV. Meanwhile, we make life decisions that impact our finances by hundreds of thousands or even millions of dollars without ever running the numbers.
These aren't "financial decisions" in our minds: they're life decisions. Having children, getting pets, choosing where to live, going to college, getting married (or divorced)—these feel like personal choices driven by emotion, values, and circumstances.
But here's the truth: every major life decision is also a major financial decision. Understanding the financial implications doesn't mean you should make choices based solely on money, but you should at least know what you're signing up for.
Today we're going to examine the real costs of major life decisions that can add years to your working life or accelerate your path to financial independence.
The Cost of Children
Disclaimer: I don’t think money should be the reason why you do or do not have children. That said, money might affect the timing or number of them!
The Standard Estimates
The USDA estimates it costs $233,610 to raise a child to age 18 (2015 dollars, probably $280,000+ today). But this drastically understates the real financial impact.
The Real Costs
Direct expenses (birth to 18):
Childcare: $150,000-300,000 (varies dramatically by location)
Healthcare: $20,000-50,000 (insurance, deductibles, unexpected costs)
Food: $30,000-60,000
Housing: $50,000-150,000 (bigger home/apartment)
Transportation: $30,000-80,000 (larger vehicle, more trips)
Clothing: $15,000-30,000
Education/activities: $20,000-100,000
Total: $315,000-770,000 per child
College costs (additional):
In-state public: $25,000-100,000
Out-of-state public: $50,000-300,000
Private college: $100,000-500,000
Opportunity costs (the hidden killer):
Reduced earnings from career breaks: $200,000-500,000
Lost investment growth on money spent: $300,000-800,000
Delayed retirement contributions: $100,000-400,000
Total lifetime cost per child: $1,000,000-2,000,000+
This is a large range, and not all costs will apply for everyone. The intent is to demonstrate just how many expenses there are and how much they can add up to.
The FI Impact
One child can add 5-10 years to your working life. Two children can add 10-15 years. This doesn't mean you shouldn't have children, but it does mean you should understand the trade-offs. Having a child at 21 while you’re working to build your career could have a drastic impact on your finances while waiting until you are established in your 30s can prepare. Remember, due to compound interest, your earliest years are by far your most important!
Ways to reduce the impact:
Childcare alternatives (family, nanny shares, one parent staying home)
Location arbitrage (lower cost areas)
Public schools in good districts
Community college for first two years
In-state public universities
Teaching children about money early
The Cost of Pet Ownership
The Emotional vs. Financial Reality
I like dogs! I grew up with a dog. I currently have *two* dogs. (I don’t recommend this unless you’re already financially independent.) Pets bring joy, companionship, and health benefits. That said, dogs (and cats!) are expensive, and most people don’t think of all the future costs when they’re staring at a cute puppy.
Lifetime Costs by Pet Type
Dogs (10-18 year lifespan):
Initial costs: $1,000-3,000 (adoption, supplies, initial vet)
Annual costs: $1,500-4,000 (food, vet, grooming, boarding)
Lifetime total: $20,000-60,000
Cats (13-20 year lifespan):
Initial costs: $500-1,500
Annual costs: $600-1,500
Lifetime total: $8,000-25,000
Specialty pets (birds, reptiles, etc.):
Highly variable but often $10,000-30,000 lifetime
The Hidden Costs
Emergency veterinary care: $2,000-15,000 for serious conditions (My childhood dog was hit by a car in the 1990s when vet care was cheap. The bill was over $5,000 and could be over $10,000 today!)
Pet insurance: $300-1,200 annually (this is usually a terrible product, and I don’t recommend it.)
Boarding/pet sitting: $50-100 per day during travel (meanwhile, flying with a pet can cost more than a human ticket!)
Home damage: Varies widely but can be thousands. (Puppies are cute, but shoes and furniture cost money to replace.)
Lifestyle limitations: Reduced travel flexibility, housing restrictions (nearly every apartment charges monthly pet rent)
The FI Consideration
A dog can cost $40,000+ over its lifetime, money that could become $150,000+ if invested instead. Multiple pets or expensive breeds multiply this impact.
Money-conscious pet strategies:
Adopt from shelters rather than buying from breeders
Budget for veterinary emergencies (Pet ERs can charge whatever they want)
Learn basic grooming and care (we trim nails at home)
Consider pet insurance carefully (often not worth it)
Choose pets that match your budget and lifestyle
The Cost of College
The Sticker Price vs. Reality
College costs have increased far faster than inflation, making higher education one of the most expensive purchases most families make.
Current College Costs (2024-2025)
These estimates include tuition, room & board, books, supplies, and other fees.
Community college:
Average annual cost: $4,000-8,000
Two-year total: $8,000-16,000
In-state public universities:
Average annual cost: $25,000-35,000
Four-year total: $100,000-140,000
Out-of-state public universities:
Average annual cost: $40,000-50,000
Four-year total: $160,000-200,000
Private colleges:
Average annual cost: $50,000-80,000
Four-year total: $200,000-320,000
Elite private colleges:
Annual cost: $80,000-90,000
Four-year total: $320,000-360,000
The Opportunity Cost Problem
$200,000 invested at age 18 instead of spent on college becomes $3.2 million by age 65 at 7% returns. That doesn’t mean college is a bad idea for everyone. (I have multiple degrees.) But it isn’t a good idea for everyone. Also, if you borrow the money for college, all these numbers are higher because you pay interest too.
Making College More Affordable
Strategic approaches:
Community college for first two years: Save $50,000-100,000
In-state public universities: Often excellent education at lower cost
Merit scholarships: Research schools where your qualifications are above average
Work-study programs: Reduce borrowing
Graduate in 3-4 years: Every extra semester costs $15,000-40,000
Alternative paths:
Trade schools: Often higher starting salaries, lower debt
Apprenticeships: Earn while learning
Online degrees: Significantly lower costs
Military service: GI Bill benefits
Geographic Location Costs
The Million-Dollar ZIP Code Decision
Where you choose to live might be the biggest financial decision you make, often determining lifetime wealth accumulation.
Cost of Living Variations
High-cost areas (San Francisco, NYC, DC):
Median home price: $800,000-1,500,000+
Annual salary needed for comfortable life: $150,000-300,000+
State income tax: 0-13%+
Medium-cost areas (Austin, Denver, Chicago):
Median home price: $400,000-700,000
Annual salary needed: $75,000-150,000
State income tax: 0-5%
Low-cost areas (most of Texas, most of Tennessee, most of Florida):
Median home price: $200,000-400,000
Annual salary needed: $50,000-100,000
State income tax: 0%
The Geographic Arbitrage Opportunity
Same job, different location:
Software engineer in San Francisco: $150,000 salary, $4,000/month housing
Software engineer in Austin: $120,000 salary, $1,500/month housing
Annual savings: $20,000+ despite lower salary
Remote work revolution: Many jobs can now be done from anywhere, maximizing this arbitrage.
While it’s easiest for remote workers, anyone can benefit from this. In Chicago, the average teacher pay will be ~$114k in the 2027-28 school year. In Kokomo, Indiana the average teacher pay is $41k. Even though Chicago is more expensive, it’s not 3x more expensive. Research what your job pays in other parts of the country and you may find a higher salary for the same work!
Location Factors Beyond Housing
Some places are cheap for a reason. Don’t look for the least expensive places to live. Instead, look for the best ratio of income to cost-of-living for your line of work.
Transportation: Urban areas may allow car-free living
Taxes: State income tax differences can be $5,000-15,000+ annually
Lifestyle costs: Entertainment, dining, activities vary dramatically
Career opportunities: Some locations offer better long-term earning potential
Marriage and Divorce Costs
In general, you save money by partnering with someone else and sharing expenses. You probably share a house, a car, food, and entertainment. You shouldn’t get married just to save money, but it is a common side effect.
Marriage: The Financial Partnership
Wedding costs: Average $30,000-50,000 (completely optional expense and completely bonkers to spend this much on a big party for yourself)
Combined finances: Can improve or worsen financial situation
Tax implications: Marriage bonus or penalty depending on incomes
Insurance savings: Often cheaper to combine policies
Lifestyle inflation: Two-person household costs don't scale linearly
Divorce: The Wealth Destroyer
While not helpful, my advice is to never get divorced. If the divorce is contested, the lawyers win and both parties lose.
Legal costs: $15,000-50,000+ for contested divorces
Asset division: Typically splits accumulated wealth in half
Ongoing obligations: Alimony, child support
Duplicate living expenses: Two households instead of one
Career disruption: Time and emotional energy drain
The FI impact: Divorce can set FI plans back 5-10+ years due to legal costs and asset division.
Career and Education Decisions
The Graduate School Question
Do not assume that spending hundreds of thousands for an additional degree makes financial sense. Check salaries post-graduation and calculate the return on investment!
MBA programs: $100,000-300,000 total cost
Law school: $150,000-400,000 total cost
Medical school: $200,000-500,000 total cost
PhD programs: Often funded, but opportunity cost of 5-7 years
ROI considerations:
Will increased earnings justify the cost and time?
Could work experience provide similar advancement?
Are you pursuing education for the right reasons?
Career Path Financial Implications
High-income careers: Medicine, law, finance, tech
Higher earnings but often longer training periods
High debt loads during training
Lifestyle inflation pressure
Stable careers: Teaching, government, corporate jobs
Predictable income and benefits
Pension plans (increasingly rare)
Work-life balance advantages
Entrepreneurial paths: Starting businesses, consulting
Higher potential upside and downside
Irregular income requires larger emergency funds
No employer benefits
Aging Parent Care
The Sandwich Generation Challenge
Many people find themselves supporting both children and aging parents simultaneously.
Potential costs:
Home modifications: $5,000-50,000
In-home care: $25,000-75,000 annually
Assisted living: $50,000-100,000 annually
Memory care: $75,000-150,000 annually
Family caregiver opportunity costs: Lost income and career advancement
Planning strategies:
Long-term care insurance (very expensive but potentially worth it if you know it will be needed)
Family discussions about expectations and resources
Understanding Medicare and Medicaid benefits
Geographic considerations for caregiving
Making Better Life Decisions
The Framework for Big Decisions
Step 1: Calculate the real cost
Include all direct expenses
Factor in opportunity costs (most people forget this!)
Consider timeline and inflation
Step 2: Understand the FI impact
How many additional working years?
What's the delay to financial independence?
Can the cost be reduced without eliminating the benefit?
Step 3: Align with values
What matters most to you?
How do financial and personal goals balance?
Are there creative solutions that serve both?
Step 4: Plan accordingly
Adjust savings rate and timeline
Build larger emergency funds
Consider insurance options
Optimize other expenses to compensate
It's Not About Saying "No" to Everything
The goal isn't to avoid all expensive life choices. The goal is to make them consciously, understanding the trade-offs, and planning accordingly.
Examples of conscious trade-offs:
Having children but living in lower-cost areas
Getting pets but choosing less expensive breeds/species
Attending college but choosing in-state public options
Living in expensive areas but house hacking or having roommates
My Personal Examples
Geographic Arbitrage
I previously wrote about leaving New York City and how moving to Texas saved me $15,000+ annually in housing and taxes alone. This single decision accelerated my FI timeline by 2-3 years.
Education Choices
I was only able to attend the college I did because of scholarships. If I had instead been required to pay private tuition, I would have chosen an in-state public university, saving $100,000+ in debt. I started my career debt-free instead of with monthly payments.
Pet Decisions
Even though I had a dog growing up, I chose not to have pets during my wealth-building phase, saving $30,000-60,000 that went toward investments instead. This was a personal choice based on my priorities and lifestyle.
The Bottom Line
Every major life decision has significant financial implications. Understanding these costs doesn't mean you should make every choice based on money, but you should make them with full awareness of the trade-offs.
The most expensive mistake is not planning for major life expenses. When you understand the real costs, you can:
Make more informed decisions
Plan and save accordingly
Find creative ways to reduce costs
Adjust your FI timeline realistically
Remember: These decisions aren't just about money. They're about designing a life that aligns with your values and priorities. But designing that life is much easier when you understand what it actually costs.
Next time, we'll talk about bad advice. Unfortunately, outdated or outright incorrect information is still passed around. We’ll separate myth from facts.
Until then, your homework: Pick one major life decision you're considering and calculate the real financial impact. Include direct costs, opportunity costs, and the effect on your FI timeline.
Here's to making life decisions with your eyes wide open,
Max
Remember: The goal isn't to optimize every life decision for money. The goal is to understand the financial implications so you can make conscious choices that align with your values and priorities.