It’s important for everyone to periodically review their financial future. There are certain money questions to ask yourself that will help keep you on track. These aren’t questions we need to be asking ourselves every day, but they are questions that should be occasionally asked and answered.
The good news is we can start asking and answering these questions today. You can choose to answer one a day, several questions a day, or try to answer them all in one sitting. The goal is to gain financial clarity, and every one of these questions is designed to generate more clarity.
Number 1: Am I making progress toward my personal finance goals?
Are you making progress toward your personal finance goals? Are you in a better situation today financially than six months ago? One year ago? Five years ago? These are all good beginning money questions to ask yourself.
This is one of the reasons goal setting is so important. It gives you something tangible to measure and compare against. For example, if your goal five years ago was to increase your net worth by $500,000 by the year 2022, you have something to measure.
If you’ve increased your net worth by $500,000 or more, you’ve reached or exceeded your goal. Or if you increased your net worth by $300,000 or $400,000 you’ve made good progress. If your net worth has remained the same, that tells you there was little progress made toward that specific goal. Hopefully you recognized that well before the five-year mark, but it’s a sign that you need to change your actions if the goal is still important to you.
While the $500,000 example is an easy metric to identify, personal finance goals don’t have to be a straight money metric. A goal could be to have enough cashflow to work less, have more time at the end of the day, or move from a stressful job to a less stressful one.
Number 2: Am I being a value based-spender?
Value-based spending is the alignment of your life goals with your financial behavior. And only purchasing what you truly need, value and enjoy. It’s the avoidance of frivolous and impulsive purchases that have little to no value in your life.
Being a value-based spender is one of the key principles that helped me completely turn around my financial situation. It’s a step I took even before budgeting because it naturally eliminated some of the wasteful items I used to spend money on and put that money back into my pocket.
Related: Are Your Financial Values Aligned With Your Life Values?
Number 3: Who are my money role models?
Jim Rohn said you are the average of the five people you spend the most time with. So who are your money role models? Who are you spending time with? Are your money role models investing large portions of their income? Are they making intelligent investments? Or are they making frivolous purchases and wasting away their incomes?
Who you spend time with matters, and your money role models matter. And remember you don’t need to know someone for them to be your money role model. Your role models could be podcasters, authors of personal finance books, YouTubers, or any variety of people. The important thing is they are credible, you are learning from them and taking recommended actions.
Recommended personal finance podcasts:
Number 4: What steps am I taking to get educated about money?
What have you been doing to get educated about money and personal finance? Listening to podcasts? Reading books? Taking action on what you’re learning? Making mistakes and getting better?
There are so many ways to get educated about money and personal finance, pick a few that work for you and take action on what you are learning.
Number 5: How can I invest more?
Money questions number five to ask yourself is all about investing. Almost everyone wants to invest more–few actually do. Write down some ways you can invest more. Maybe it’s saving a little more to invest, earning more, or getting a side hustle. There are lots of ways to do it–be creative and find a few ways you can get started investing more. A few examples:
- Work overtime if available
- Take on a side hustle
- Use leverage
- Start a business
Related: Gig Work: 28 of the Best Jobs & Opportunities for 2021 and Beyond
Number 6: What is one thing I can do to increase my income?
This question piggybacks on the last section. Identify one thing you can do to increase your income. Don’t make it too complicated, come up with just one thing to start. Explore that idea until either you take action on it or learn through research that it’s not going to work.
Take some time with it and really go in depth on the idea. If it’s got potential, you’ll take action. If it doesn’t, you’ll discard it and move on to something else.
Number 7: If I could learn one thing about money, what would it be?
If there was just one thing you could learn about money, what would it be? There is so much to learn about money and so many sub-topics that it can be overwhelming. We also don’t know, what we don’t know. To simplify, narrow it down to just one question and work from there. Some examples of topics people commonly want to learn more about:
- Saving
- Investing
- Interest rates
- Inflation
- Financial independence
Related:
Number 8: What are my long-term financial goals?
What are some of you long-term financial goals or really big goals? Like big life goals that you want to achieve over the course of five years or more? Some of those goals might relate to you individually while other goals might relate to your family as a whole. Examples of long-term financial goals:
- Pay for your children’s college
- Retire early
- Become financially independent by a certain age
- Travel six months out of the year
Related: Crushing Your Long-Term Financial Goals
Number 9: What are my short-term and medium-range goals?
We’ll put the short-term and medium-range goals into one category. These goals are typically a much shorter duration that the long-term goals written about in the previous section. Short-term goals and medium-range goals can be stand alone or part of a much bigger long-term goal.
For example, if you are currently 35 years old and your long-term financial goal is to become financially independent by age 50, a short-term goal might be to purchase a rental property in the next year. A medium-range goal might be to purchase three properties in the next two and a half years.
These goals all work off each other, ultimately moving the person toward their long-term goal of early financial independence.
Number 10: Are there any books that would help me improve my financial situation?
Books are a great way to learn. They go in depth and provide great detail into the authors thought process. In just one book, you can learn:
- How the author became successful
- Strategies used
- New things to try
- Pitfalls to avoid
- Among many other things
Are there any personal finance books that would help you reach your goals faster? I’ve been influenced by many, including:
Number 11: Have I set up myself and my family for a prosperous financial future?
This is one of those big picture money questions to ask yourself. The answer to a question like this is probably layered as well. You may be well on your way to setting up your family for a prosperous financial future, but not quite there yet.
Or you might already be there. Or you might be just starting down the path to setting you and your family up. Wherever you are in the process, the key is that you are making progress. And don’t worry, if you’re just getting started and not where you want to be yet, you’re still ahead of the game.
Number 12: What is my savings rate?
What is your current savings rate? What are your savings goals and is your current savings rate meeting or exceeding those goals? Are you saving to invest as well?
More things to consider:
- How can you boost your savings rate?
- How can you meet or exceed your savings goals?
- Are systems set up to more easily save?
Number 13: How can I improve my credit score?
Some people say a credit score doesn’t matter. I hear where they are coming from, but I don’t agree. If you’ve ever tried to get a home loan or rent an apartment you know what I’m talking about. A high credit score isn’t a guarantee of financial success but it’s a good start and a reflection of your financial behaviors.
For tips to improve your credit score try these resources:
Number 14: Am I comfortable with the amount of money in my emergency fund?
How do you feel about the money in your emergency fund? Do you have enough cash reserves to cover three to six months of expenses? A few things to consider about how much to keep in your emergency fund:
- How steady is my income or job?
- Do I have a partner who also has a source of income?
- Not quantified by numbers–what amount of reserves will help you sleep better at night?
Related:
- How Much of an Emergency Fund Should You Really Have?
- Why the Pandemic Prompted Me to Increase My Emergency Fund
Number 15: Am I on track for retirement?
You might need some help on this one because it’s not an easy question to answer. Are you on track for retirement? Will you have enough for cost of living, recreation, travel, healthcare, possible long-term care and all the incidentals that come up.
You’ll also decide if you want to be fully retired, work part time, or take on a consulting job now and then. Where you live also matters as different states and countries have different taxes and cost of living. All these considerations and more will factor into your answer of whether you are on track or not.
Number 16: What are my biggest life values?
What are the things in life you most value? Time with family, trips with friends, personal growth, travel, experiences, etc. What is number one on the list? How about number two? Listing the top five things you value is a great start and provides a lot of clarity.
This is also a recommended exercise in the first chapter of my book Cash Uncomplicated. Once you get your values in order, a lot of other questions naturally get answered.
Number 17: Are my life and financial values aligned?
This question piggybacks off the last question. Does your spending reflect what you most value? For example, many people say they value family above all else. However, they purchase expensive cars and houses, and work late to support their lifestyle. Their financial behavior doesn’t align with their stated values.
This is not to pass judgement on people who do this. It’s simply a recognition that their spending habits do not align with stated values. They may not even realize they don’t align until they ask and think about the question.
Number 18: What is my net worth?
Your net worth is your financial scorecard. It’s a good indication of many things including, but not limited to:
- If you are on track to reach your financial goals
- Progress made since last year, two years ago, five years ago, etc.
- Retirement outlook
- Performance of investments
Number 19: Is there anything stopping me from reaching financial prosperity?
Are there any obstacles in your way of achieving financial prosperity? What are those obstacles and how can they be removed?
In Rich Dad Poor Dad, Robert Kiyosaki wrote that the wealthy ask how they can afford something while the poor say they can’t afford it. Similarly, if there are obstacles in your way, it’s important to ask how we can remove them. Simply acknowledging the obstacles and doing nothing to remove them is a sure-fire guarantee to stay right where you are.
Number 20: Are my investments optimized?
It’s one thing to save, and another thing to invest. While it’s important to save and create an emergency fund, it’s critical that we also save to invest. Furthermore, we have to make sure those investments that we worked so hard to invest in, are optimized.
I once heard a story of someone who spent years saving and investing. Turns out, this person never actually transferred the money into an investment, it was just left in the brokerage account sitting there earning zero interest. Almost 20 years went by without the money compounding. Hundreds of thousands of dollars were lost by this simple oversight.
While this is an extreme example, I’m sure there are many people who are not optimized. Take a review of your portfolio and make sure it’s optimized.
Number 21: Have I planned for my children’s college?
When our kids are born, most of us are over the moon to have a child. The years go by quickly and the next thing you know they are in high school ready for college. That’s when many parents realize they need to get planning for college.
While not insurmountable, it’s a little late in the game. There’s a lot of catch up needed. If your children are still young, the time is now to start planning. Start the compounding now so there’s no last second scattering needed.
Number 22: Does my budget need to be updated?
Budgets are not a stagnant document that is made once and forgot about. It evolves and changes over the years. Some expenses might go away like childcare while new expenses are added like a new house. Life rarely stays the same.
It’s important to take some time now and then to review the budget and see if any changes need to be made. Make the necessary adjustments and then follow the new budget. I’ve found once or twice a year has been adequate for me.
Number 23: Am I properly insured?
Not the most exciting question in the world, but a necessary one. Has your home or rental properties gone up in value over the past couple years? If so, have you adjusted your insurance to reflect that?
If your net worth has moved up, are you still adequately insured? Any recent life circumstances that have occurred that would necessitate a change to your insurance? Go through your insurance and make sure everything still looks good. And update what you need to.
Number 24: Do I worry about money? If so, how can I worry less?
If you’re someone who tends to worry a lot, you probably worry about money as well. Are there steps you can take to worry less? Would increasing your emergency fund help you worry less? Would paying off some lingering debt help?
Or maybe you need to reflect as to why you worry, maybe it’s something you can fix that has nothing to do with money. Be honest with yourself and work toward a solution.
Number 25: Can I save and invest while living wealthy now?
This is where value-based spending comes back into play. Is it possible you can save, invest, have enough for daily living expenses, and live wealthy now? I think you can and here’s why.
After writing down their values, many people realize they don’t need a lot. Furthermore, the things at the top of their list are things they can actually do now. So while it’s not possible to have anything and everything, it is possible to have your top things while saving and investing for the future at the same time.
Number 26: Are my finances automated?
Have you set up systems to pay yourself first? Automation is one of the most effective ways of saving and investing because once you do the work of setting up the systems, all you have to do after that is a little maintenance and updating. Automation allows you to pay yourself first and live on the rest.
I saved this section for last because it’s one of the most powerful personal finance principles anyone can implement. It helped me move from living paycheck to paycheck to investing large percentages of my income and I know it can help you too.
Conclusion
Personal finance requires some maintenance periodically. We don’t have to spend hours on our money situation every day, but every now and then we have to put some time and effort into it. These money questions to ask yourself are part of that maintenance plan.
Usually when you ask great questions, you get great results. All of these money questions to ask yourself are designed to get you thinking and to assess your situation. Some of the questions might apply to you, others not so much. And some might be really high leverage questions you spend a great deal of time thinking about and developing dynamic solutions.
What money questions do you ask yourself? Have they helped you make progress toward your personal finance goals?
