Our personal economic lives are full of options. Should we quit our job and go back to school. Contribute to a Roth? Switch careers? Send junior to private school? Retire now? Move to Texas? Take Social Security early? …

Each of these decisions has consequences for our personal finances that play out to the end of our days.

ESPlanner provides a way to simple way to compare options like these. Its trick is to compare living standards.

Mark and Becky’s son, Wunderkind, a jazz pianist, came home from piano lesson last month with a question: “Can I attend the Interlochen Arts Academy boarding school for my senior year in high school?” The one-year tuition is $40,000, which is a huge sum for Mark and Becky. But they visit, audition, and are eventually presented with $15,000 in financial aid and scholarships. Can they afford the balance of $25,000?

Let’s see how ESPlanner tackles this question.

ESPlanner calculates the family’s 2008 Mark and Becky’s recommended consumption at $65,000. The is the amount Mark and Becky can spend, in today’s dollars, each and every year over and above paying for taxes, insurance, and housing costs and doing the saving needed to maintain the household’s living standard per person over time.

But shelling out $25,000 is a big number compared with $65,000.

Or is it?

This chart shows what happens to their annual consumption if Wunderkind goes to boarding school.

The red columns show Mark and Becky’s consumption if Wunderkind stays home. The blue columns show their consumption if he boards.

Note that 2008’s consumption doesn’t drop by $25,000, as expected. Why not? Because ESPlanner’s consumption smoothing pays for the one-time expenditures by reducing Mark and Becky’s consumption not just in 2008 and 2009, but in all future years as well.

It does so by having the family use up some of the regular assets it’s saved. Doing so means fewer assets available in the future to finance consumption.