In the accounting world, financial statement users argue about measuring items at historical cost versus fair value. One option offers better reliability of numbers for investors while the other offers more relevance. Which one do you value more?

I won’t bore you with more accounting talk, but we can see a tradeoff happening. You have to pick one, because you can’t have both. More importantly, each user has objective(s). Life is no different. You will be faced with a series of tradeoffs and you will have to decide each time, which option meets your objective.

Here are two examples of tradeoff scenarios that you may face after you graduate high school:

1) Do you want to be the person who goes out to party every weekend versus the person who stays in for four years to complete their university degree with honours?

University is like having a full time job; you actually need to dedicate 40 hours a week in order to be successful at it. You need a consistent work ethic all semester not flashes of effort. The uphill battle after a poor mid term performance is too overwhelming, even with a positive attitude. You also need adequate rest to be mentally prepared and alert. My parents told me growing up there are two kinds of people after high school: those that party every weekend and those that have well paying careers. They were right. This is a trade off between short-term entertainment and popularity versus good grades and a long-term prosperous career path.

Side note: At one point in my life, I did try to be superman by attempting to achieve both. I quickly discovered that it is not attainable.

2) Do you want to be the person who always has the newest/hottest things versus the person who lives a less flashy life but buys their own house?

I’m not saying everyone’s objective should be to buy his or her first house at a young age. Perhaps your decision is dependent on whether you are in a committed relationship or your age. Or maybe you simply prefer designer clothes or expensive cars. Those are things to consider when establishing your objective. The point here is the trade off. If you’re buying the latest iPhone and designer clothes, there’s a good chance you aren’t putting money aside for a house. Maybe when you see one of your high school friends’ purchase their first house at 23 on Facebook, you will realize that the $500 belt you recently purchased wasn’t the smartest decision.

Side note: The average house in our area sells for $600,000. Lets pick a modest low-end home for $300,000. A conservative 20% down payment would come to $60,000.

Conclusion

It is important to note that your objectives do change throughout life with experiences, events, and encounters. Obviously, we do not expect a 16 year old to have the same objectives as a 22 year old. Nonetheless, it is vital to constantly re-evaluate your objectives so you can make an optimal decision that pushes you further towards a successful life when faced with a tradeoff.