Quick question: Does money drive your choices or does it support the life you want to live? If you were on more solid financial footing, what opportunities would be open to you?
Our financial situation is often the first thing that comes to mind when we start ticking off the reasons why we can’t do something. And far too many of us use money mindlessly. We just keep spending and accumulating without giving any thought to how our large and small financial decisions affect our present and future life options.
Here are 10 pivotal money questions to ask yourself:
- How would you rate your current financial situation?
- Do you know exactly how much debt you have? If you carry a balance, do you know the interest rate you’re paying?
- What are your top three money drains? (If you don’t know, see below for some tips)
- Is your financial situation preventing you from taking action on an important life or career goal?
- If you could make one change regarding your finances, what would it be?
- If you make no changes in how you handle your money, how will it impact your future?
- When it comes to your finances, in what ways are you not being honest with yourself?
- What opportunities have you said no to because of your financial situation?
- What financial advice would you give a recent high school or college graduate?
- What financial decision(s) do you most regret?
If you want to transform your relationship with money, you owe it to yourself to answer these questions.
When you’re ready to take back control over your money, here are some quick tips:
- Track your spending for 30 days. This is the single greatest eye-opener when it comes to your financial health. NOTE: you may need to do this before you can answer the pivotal money questions.
- Make a list of your five to 10 most recent purchases. Make sure you include recurring expenses such as gym memberships, exercise equipment, car leases, business-related programs, etc. For each one, answer the following questions:
- Are you happy that you made the purchase or do you regret it?
- For any expenditures that landed on the regret list, ask how you might have used that money in a more productive way.
- Calculate how many work hours each item cost you. With that in mind, revisit the previous two questions.
- Commit to asking yourself these questions BEFORE every “impulse” purchase.
- Challenge yourself to use cash instead of a credit or debit card for a few days or even a week. Note how it changes your buying decisions. I’ve found that when I use plastic, I don’t think too much about how much I’m spending. When you challenge yourself to count out a handful of 20s (or 100s!), that mindless purchase may snap you back into real time.
- Implement a spending freeze (excluding essentials) for a certain period of time. At a minimum, discipline yourself to wait 24 hours. During the freeze, keep a list of items you considered purchasing. At the end of the freeze, look at the list and cross out all items in which you’ve lost interest. Calculate how much that saved you and consider how those “impulse” purchases can add up over weeks, months, and years.
THIS WEEK’S CALL TO ACTION:
Answer the pivotal questions and commit to being more mindful with how you use your money.