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By Samantha J. Garcia, CFP®, AIF®, CDFA®, Wealth Advisor at Halbert Hargrove.

Making a tough financial decision can impact not just your bank account balance today, but potentially your financial wellbeing for decades. That’s why it’s so important to take the emotion out of the decision by thinking critically about the possible outcomes. It can be easy to get wrapped up in emotions, but doing so can lead to making poor financial decisions. Emotions can lead us to act rashly or quickly, without thinking about the benefits or drawbacks of the decision.

For example, we can look at a divorcee who demands to keep the marital house because it’s meaningful to her. But she should think critically about what that means financially, not just today, but also in the future. Maybe the divorcee realizes too late that she can’t afford the house, even though she willingly sacrificed everything else to keep it. Instead, she could have kept more of the joint assets had she not focused solely on the house, which would in turn have provided more financial security.

At many junctures throughout our lives, we’ll be forced to make important decisions that impact not only our finances, but the trajectory of our future. Even the joyous news of an unexpected pregnancy can create a need to make tough financial decisions. When facing moments like this, it’s vital to take a step back in order to make a rational decision. From my professional experience, below are four key steps to take when faced with a difficult financial choice.

1. Be proactive — Life is a winding road, it’s not a straight shot. There’s always going to be an unknown, which is why being proactive is critical. Make sure you have a healthy reserve of savings. Even if there’s not a major life change, regularly go through your estate planning and beneficiary documents, insurance coverage, and investment and saving strategies just to make sure everything is in solid financial standing. Doing this every five years will help ensure that everything is in order when a difficult time comes, which will help you feel more confident making bigger financial decisions.

Investments and savings strategies should be reviewed annually, but the bigger items of reviewing estate plan documents, beneficiaries, insurance coverage can be taken in smaller chunks if you rotate through them and do one per year. It is also a good idea to review your full financial picture when there are major life changes or your circumstances change.

2. Have a fearless conversation with yourself — Be realistic about the impending changes to ensure you fully understand what the actual expenses might be. For example, if you’re recently widowed, it’s important to be honest and realistic with yourself, since you no longer have a spouse to bounce these ideas off of. Ask yourself: Do I know where all the money is? How much money is coming in, and what do I actually need to survive? Can I afford to keep this lifestyle or do I need to scale down? Be honest – is your regular Starbucks latte necessary? Because if it comes down to making your rent or not, then something has got to give.

This also applies to setting expectations and goals. It’s important to have the fearless conversation about how you may meet your own goals.  Are you assuming you’ll never buy a cup of coffee outside the house, when you’ve consistently been buying it from the neighborhood coffee house three times per week for five years? (This is a silly example, but it makes the point about being realistic with ourselves.) Be honest about what you are capable of and willing to compromise or sacrifice to meet your goals.

3. Write everything down — There is a lot of value in writing out goals, objectives, or even a budget. Putting pen to paper can often help your brain problem solve without you always being aware of it. When making tough financial decisions, it can help to write out a pros and cons list, since this can help take some of the emotions out and allow logic to take over. Once you see that the pros list has five things and the cons list has ten, it may become clear what needs to happen.

It can also help to write out a budget and refer back each month or quarter to track how you’ve done. Checking back keeps you accountable and often will make you think twice about those off the cuff purchases. Similarly, writing out your goals (especially the financial ones) can help you determine and break down bigger goals into smaller steps that you can take to meet them. Keep the goals visible and in a place you can see regularly, and similar to the budget, it’s important to check in and see how you are tracking periodically. Checking in with yourself regularly helps keep you accountable and your future self will thank you.

4. Don’t make emotional decisions alone — It is important to surround yourself with people who can help you make logical financial decisions. These people can help you think critically about the financial ramifications of those decisions, which could impact your future success. Having someone to help take the emotion out of the decision-making process can help prevent regret and potentially negative consequences. It’s possible they may be able to come up with alternatives that weren’t on the table before. It’s important to note the person assisting should have your best interest in mind as they are helping work through these decisions. I believe in having a team of professionals around you, like a trusted advisor, that are not emotionally tied to your decisions and have relevant expertise.

These four steps are not just a guide to when you face a difficult financial decision, but they can also be used to help you prepare for the inevitable and unpredictable.

Life is full of unpredictable moments- some good and some bad. But by proactively keeping your affairs in order, having tough honest conversations with yourself (and your partner when applicable), writing down your options in a logical way, and surrounding yourself with unbiased perspectives, you will yield far better results than letting emotions rule your biggest financial decisions. It’s not going to be easy, but these steps can help make financial decisions easier. Life is undoubtedly going to throw you a curveball at some point- so grab a bat, step up to the plate, and get ready to knock it out of the park.


Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser located in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our registration status, fees, and services can be found at This blog is provided for informational purposes only and should not be construed as personalized investment advice. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant. All opinions or views reflect the judgment of the author as of the publication date and are subject to change without notice. All information presented herein is considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.