There are a lot of loud and strong opinions as to how to manage your personal finances and investments. You have personal finance influencer Suze Orman who clearly has something against buying lattes. CEO of Rithotlz Wealth Management Barry Ritholtz thinks her advice is nonsense, per his post Buy Yourself a F*^king Latte. I’ve heard people say to buy a starter home ASAP, while others say to jump right into that long term “forever” home. The professionals can’t even agree!

At the end of the day, personal finance and investing decisions are – well – personal. What works for one person might not work for another. According to spreadsheet math, it’s best to live in the cheapest home, drive the cheapest car and don’t even think about that latte. In reality, that smaller home might make you miserable, that car might be unreliable, and that latte might turn you into a happy and productive morning person.

This got me thinking – what are some factors to think about to make a correct financial decision?

1. Aiming for $ or happiness

Some people view a correct financial decision as maximizing the amount of money saved, earned, and invested. The sole unit of measurement is dollars. This mindset encourages living WAY below your means in order to save as much as possible. It could come in the form of extreme frugality.

Others want financial decisions to maximize happiness. Money is a resource to do the things you want and live each day to the fullest (within reason of course). The sole unit of measurement here is current happiness. This doesn’t mean blowing a paycheck on retail therapy, but the emphasis is on doing the things that make you happy with less regard towards savings.

There are a lot of people that go all in on one of these two mindsets. But these two mind sets should not be mutually exclusive. Both goals should be considered. You don’t want to be a miserable person only focused on penny pinching, but you can’t solely focus on unsustainable happiness. The most successful people at doing this are able to spend their money on what bring the most happiness per dollar spent.

2. Spend to solve problems

One way to maximize the amount of happiness spent per dollar is to spend to remove problems. You and your wife fight over the sink, redo the bathroom to include a double vanity! You’re spending way too much month on gas, buy the hybrid! Your dog keeps running away, install a fence! From one perspective these purchases look like frivolous spending. But removing problems can have a stronger lasting impact on improving happiness.

3. Know and live with the consequences before and after the decision

No one knows what the future holds, but every decision made comes with consequences. Some are immediate or delayed, others probable or unlikely. Truly knowing and being able to live with those possible consequences is key. If you’re buying a house for just a few years, are you comfortable with selling at a loss or renting it out if the market turns? Betting on only a few stocks could make you a lot of money, or those companies could go belly up. Are the proceeds needed for something important, something you would regret not being able to fund?

People get in trouble when they don’t understand the consequences of their financial decisions. I’m talking about both positive and negative consequences here. People selling during a market drop usually won’t focus on the probable market rebound soon to happen, resulting in selling low and buying high. Or buying something expensive without seeing the impact on the budget. It could lead to less vacations, dinners out, or minimal savings.

4. Regret minimization

Jeff Bezos left his high earning job at a hedge fund to start Amazon, a highly risky venture selling books online at the time. He thought about the decision for a while, but framing it a certain way made it obvious to him:

“I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried.”

I view financial decisions the same way. While knowing all the possible consequences of the decision, will there be regret for either doing it or not doing it? Avoiding short term financial loss might lead to a lifetime of regret.

5. Avoid being wiped out

This goes without saying, but no possible consequence should result in financial ruin. I would bet that Jeff Bezos would not have lived under a bridge if Amazon didn’t pan out. He certainly went all in, but he would have ended up alright even if selling books online didn’t.

So, what is a correct financial decision? Get ready for the most unsatisfying answer to the question! There is no such thing as one correct financial decision for everyone. You have to weigh the spreadsheet math against happiness, know the good and bad consequences while being able to live with the unknown result, and minimize the amount of regret while avoiding being wiped out in the process.