The more I do this financial planning work, the more I see just how personal financial planning is. You can line up two people who have similar educational backgrounds, professions, and sociocultural identities only to find that they will feel wildly differently about their finances. It is particularly stark when you look at their risk tolerance and what brings them security.

I can tell you to have 3 month’s worth of your salary saved for emergencies, but that doesn’t help much if you can’t sleep at night. Likewise, I can recommend that you should aggressively pay off your private student loans due to the higher interest rate, but it wouldn’t feel good for you if you prefer the flexibility of big savings accounts to having no debt. Here are some ways to determine whether you prefer liquidity or certainty more.

• What would you do if you were buying a car and were offered a 0% loan to purchase, and you had the money saved to pay in cash? Would you take out the loan because its’s “free money” or would you write a check and be done with it all?

• If given the choice and you had the down payment available, would you rent or purchase a home? Does it appeal to you to know exactly where you’ll be living for the next 10 years? If so, you value certainty. If not, liquidity.

So you might be wondering why this matters? Consciously examining your preferences can help you to set up your finances around them. This allows you to live and manage your finances in alignment with your natural tendencies and will help reduce stress and anxiety around money.

Talk soon,

Anna