We Should Talk: Three Questions to Ask Your [Financial] Self

As naturally social creatures, relationships are essential to our everyday lives. Relationships can help us advance through our career; they can be the source of fond memories and can even help us live longer.(1) But there’s one, often overlooked, relationship that impacts many other aspects of life and must be nurtured and revisited: our relationship with money.

When it comes to personal finance, the one word that needs more emphasis is personal. Everyone that you come across has a different relationship and experience with money. So, you have to dive deeper into your own relationship to better understand how your values are being reflected in actions or why certain emotions drive decision-making.

Here are a few questions you can ask yourself to help uncover your money values and ultimately help you live out a better financial future.

1. Does my spending align with my values?

When thinking about your financial future, one of the first areas to spend some time on is your cash flow. In the world of personal finance, a lot of what happens is out of our control. However, the one thing that we do have control over is our spending.  

As personal finance author Ramit Sethi states, “show me someone’s calendar and their spending, and I’ll show you their priorities.” Whether you intend it or not, your spending is a direct reflection of your values. 

To help get a better understanding of where you’re currently at, take some time to go through your past few months of spending to get an idea of where your money is going. This step can feel tedious, but it needs to be done to get a grasp of the situation. An easy way to do this is by using a budgeting app or by exporting your transactions to Excel.  

Once you’ve taken a look at the current state of your spending, you can then begin to determine if it aligns with your values. By diving into your values, you’ll be able to figure out where you truly want your money to be going and what expenses no longer align.

What do you regret spending money on? What do you wish you had spent on instead? Were you able to spend money in ways that further long-term goals, or is it all just short-term spending? Are you paying down debt, or is your debt increasing? Do you want to increase charitable giving? Are you saving enough to make your own dreams come true? What are they?  

This exercise can also be an effective way to reduce the effects of lifestyle creep, which occurs when your expenses rise at the same rate as your income. This is because by defining your values, you can then be more intentional with your spending.

2. What do I want to accomplish one year from now financially? How about five years?  

This is a great question to ask yourself for a few reasons. First, it helps establish concrete goals or events that need to take place over the next year, giving you a timeline of action items that need to take place to make sure it happens. Second, if you’ve never thought about your financial goals, it can be a great way to figure out what you want to accomplish and then what should be prioritized. 

Each stage of your life is going to consist of different financial goals. For example, in your early career, the next big goal may be buying a home or starting a family, which both need financial planning. Or, in your mid-career, priorities may change to maxing out retirement accounts and planning for tax-efficient investing for your future.  

The question aims to help define what you want to accomplish, which will give you the information needed to create actionable steps to get you closer to achieving your financial goals. Once you have an answer – write it down. The idea is to make it accountable and assign actionable steps to it. From saving a little bit extra every month, to actually looking at your 401(k) statements and paying attention to rebalancing, and if necessary, to contacting a tax or financial professional to get a plan in place. Each step should have timeline attached.

3. What’s my “enough”? 

In a world where we tend to find ourselves searching for more, it’s important that we first define and have an understanding of what ‘enough’ means to us.  

Everyone is going to have their own definition of ‘enough,’ but when thinking about the term, it’s easy to start thinking big and trying to imagine how much money you would need to do whatever you want for the rest of time. 

But one way to approach this question is thinking through what your realistic ideal life looks like, and your current financial picture is a great place to start. Based on the spending numbers you discovered from the first question, you can begin to see what the total annual expenses are to maintain your current way of life. 

Then, you can dive deeper into the numbers and your values to determine different levels of ‘enough,’ and one way to do this is by separating it into three buckets:

• Enough money to cover regular expenses like mortgage, car payment, etc.

• Enough money to pay the bills, keep food on the table and splurge occasionally

• And enough money to live the dream life we fantasize about

If you’ve never thought through these numbers before, you may realize that you’re closer to financial peace of mind than you initially thought. Some typical financial wins that signify you may be approaching ‘enough’ are being debt-free, comfortably and consistently saving for retirement, and being on track for current life goals.

The Takeaway 

When it comes to personal finance, these questions will not only give you a sense of clarity on what you want to accomplish, but they can also help shape a path to get you where you want to be. When you’re intentional with your financial life and plan, you have a greater chance of reaching your goals and finding fulfillment in your money.

1. University to Texas at Austin Health, 2019