Six Important Questions to Consider When Improving Your Finances

Are you sick and tired of struggling week to week, month to month? You probably know it doesn’t have to be that way but just haven’t quite figured out how to get the ball rolling. (or keep it rolling might be more accurate)

Most of the time we tend to use techniques other broke people use whenever they want to break free. The problem is most people, especially broke people, haven’t a clue as to how to turn things around. We usually need a push in the right direction, from the right person. That certainly describes our old financial patterns and cycles, but in becoming debt free, we learned that we were usually looking in the wrong places for the answers to our financial woes.

The answers are found in asking ourselves meaningful questions that ultimately guide us to where we want to be. Those questions need to promote action and clarity. They need to guideย  you toward where you want to be, but the important part is paying attention to where your answers lead you. I’ve tried helping too many people that saw what they needed to do, but refused to do it for whatever reason.

If you ask yourself the following questions you will have a much easier time staying on track — if you are honest with yourself when answering them.

Do I know where my money is going?

If you have no idea where your money is going, then it certainly makes it much more difficult to make the right decisions financially. A clear picture of where you are at tells you how far you have to go in order to reach where you want to be. Just knowing that will help you change spending habits you may not have realized were even a problem. When you know you’re spending $3.00 a day, or $90 a month on Starbucks coffee, you may find that making coffee at home will help you reach your goals. (Plus Starbucks announced a 17% increase in bagged coffee — ouch!)

Know where your money is going so you know what you have to do next. track your spending and start using a budget.

Will my financial behavior create dependence or independence?

This question is perhaps one of the most overlooked questions ever! Are you setting yourself up to depend on others down the road or are you preparing for your future diligently? Personally, I do not want to have to rely on meager social handouts to provide for me and my family when I retire, and chances are, you don’t either. Is what you’re doing going to help you avoid that? I hope so because it won’t be long before the truth about how seriously bankrupt those programs are and how long they will last comes to light. The government can’t hide behind the printing press forever. Inflation is already starting to effect our lives in serious ways. Gas, food, and so many other services and products we rely on are seriously on the rise. I’m really not trying to make this a political discussion, but I AM trying to say take care of yourself and your future so that when “you know what” hits the fan, you’ll be better prepared. Social Security isn’t going to be around forever.

If you shoot for independence, when times get bad (or worse) you’ll be a lot better off. If you start now you may even be in a better position to help those in need around you too. It’s something to think about.

How do my spending habits affect my family?

Most all of us are guilty of making financial decisions at some point in time without truly considering the effects it has on our families. Whether it be buying that big screen plasma television, or going into debt to buy a car you “had to have”, the choices you make today have a real impact on those around you. The personal debt problem in this country is causing people to lose their homes, struggle to feed their families, and hindering their ability to provide health care for their loved ones. Some people blame the government for that, but I think the blame lies in the fact that too many people, for far too long, have used debt as a crutch. (See the personal accountability question below) When you spend more than you make it can only last but so long before taking a turn for the worse. Eventually, those debt payments are too much to handle andย  by that time your family is already negatively affected by the outcome.

If you first consider how your decision might harm your family, you will likely (hopefully) make different decisions than you otherwise would have made.

Where do I want to be in 5, 10, 20 years?

This question has to do with making specific and reachable goals. Financial independence isn’t specific enough. What do you want to accomplish? By when? Make a list and update it often. It is likely that as you grow as a person, as well as financially, your dreams and aspirations will change.

When will you pay off those credit cards? When do you want to be debt free? How many years will it take you to pay off your mortgage? How much do you need for retirement, and by what year? That list could be as big as you can dream it to be. Just don’t make the mistake of letting your dreams stagnate. Make those dreams a reality!

If you don’t make a list of goals, you’ll most likely never take action to achieve them.

Am I holding myself personally accountable for my financial decisions?

Too often people tend to blame others for their financial problems. The bank bounced my check. That store charged too much. A recent emergency is why I am broke and in debt.

Nooooo. The bank didn’t bounce your check — you did — by not balancing your checkbook. The store didn’t charge too much — you probably paid too much by not shopping around. The emergency isn’t the reason you are broke and in debt. Your broke and in debt because you didn’t prepare for all the rainy days life brings us.

Your inability to hold yourself accountable does more to hinder your progress than any other possibility. It’s too easy to blame others or certain circumstances for our faults. Taking responsibility for what we could have prevented or avoided is the real key. When you own up to your bad decisions, you’ll find that it is much easier to move forward. By taking responsibility for your actions you are putting YOU in the drivers seat. Not only are you in charge of fixing the problem, but the experience you gain from that, will teach you how to avoid the same situation in the future.

You are broke because you have made bad decisions up until now. It’s that simple. Do something different. ๐Ÿ™‚

Do I believe in myself and my abilities?

Do you believe you have the ability to fix your current financial situation? I hope so because no matter what the road ahead looks like you have the power to make the changes needed to turn things around. You have to believe in yourself though. It’s sad to hear people claim they have no control over what’s happening to them, even if they admit to being the reason they’re where they are in the first place. I hear it all the time though. In fact, I used to struggle with the very same thing. When I stopped saying I couldn’t do it, I started to do it.

I’ve struggled with weight for a long time. This year has been my single most successful year in weight loss. The reason for that is because no matter how many times I fail, I get back up and believe in my ability to overcome the obstacles. It’s tough and sometimes I take a few steps backward. I now believe I have the ability to lose weight and keep it off. I can’t wait to share with you how successful I have been. Success to me isn’t just losing weight (or eliminating debt), it’s keeping it off. Be sure to define what success looks like. For me it’s not just a diet, it’s a lifestyle.

The same can be said for your financial situation. The choices and changes you make have to be seen differently than just a short term fix. It has to be a lifestyle to remain sustainable.

Photo by MagnusK

 

About Brad Chaffee

9 Responses to “Six Important Questions to Consider When Improving Your Finances”

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  1. Erin says:

    Great post Brad!

  2. Tyson says:

    Excellent post. The two biggest things for me that helped fixed our finances were (and still are) knowing where our money is going and where do you want to be in the future.

    Knowing where you spend your money is huge. Are you spending more than you think on items such as dining out, coffee (that was our big money hole) or any other item. Found out that we were pouring money down the drain sort-a-speak on expensive items/entertainment type things that caused us to not have enough money at the end of the month on much more important and needed items. Knowing where your money is being spent will help you cut costs on un-necessary items.

    Also knowing where you want to be in the future is critical. You have to have goals or you’ll just walk aimlessly in life (regardless the subject…finanical or otherwise).

    Thanks Brad!

    • Brad Chaffee says:

      Thanks Tyson! People often focus on the wrong questions or solutions not ever taking into consideration how much of the answer lies in how they take action themselves. ๐Ÿ˜€

  3. Great post Brad. Half the reason I post so many articles of this type on my own website is because I’ve come to realize that actually knowing what to do with your money and how to properly manage it is a small part of the overall battle. The things that make the largest differences are the things you cover here in your post.

    It’s one thing to pick up a book and learn what to do, it’s another thing entirely to actually adjust your lifestyle to match what you’ve learned.

    For example, I was trying to help a co-worker out with his fitness goals a few weeks ago. I started telling him all the things that would probably be a good idea to change or stop doing (like a trip to McDonalds every day at lunch), and the kinds of exercises he should do, and after a while, he simply told me that he’s just not willing to change his lifestyle that much.

    At least he was honest.

    • Brad Chaffee says:

      Exactly Ross, and that’s precisely why people who I have tried to help continue to struggle. They want to know how to do it until they’re told what they’ll need to do to make it happen. Then they lose interest and go back to accepting their situation as “the only way”. Quite sad really. If someone isn’t willing to sacrifice in order to achieve something as beneficial as debt freedom, I’m not sure how to help them. The person you cited as not being willing to change his lifestyle is actually kind of pathetic when you think about it, I certainly do not know him/her but just based on that one fact, I predict that they will either be standing in line with their hand out, expecting our broke government to support them or they’ll eventually decide that the lifestyle the are living is overrated compared o the effects it will bring later down the road. I just don’t understand how anyone could accept poverty over debt freedom and prosperity. Beyond me!

      • Funny how you can get so much right about a person’s character after reading a small one-paragraph story about him or her. You’re pretty spot-on about the pathetic thing. Nice guy, sure, but quite lazy and complacent with everything in life. I just feel lucky that I woke up one morning, realized that we all only get one chance to go around, and that I want to be as successful with my one go-around as I possibly can.

        • Brad Chaffee says:

          Yeah, there’s a lot of very nice broke people out there. ๐Ÿ˜€

          Glad I woke up too, because my wife and I both used to be about as complacent as your co-worker. I look back and I think about how things might have ended up had we continued to spend ourselves into massive debt. Luckily for us, we realized it at about $26K. With the inflation that’s already hitting Americans, with high gas prices and rising food costs, I can’t imagine how bad we’d be doing if we still had all those freakin’ debt payments.

          It’s precisely why I do what I do Ross, and I’m sure you have the same motivations. To help as many people open their eyes as possible before the entire country has their hand reaching out. Keep doing your thing my friend! ๐Ÿ˜€

  4. Knowing the right questions to ask yourself and having the courage to ask them to YOURSELF are two different things and the latter may be a little difficult than the former. Of all of these, this one’s my favorite: “Where do I want to be in 5, 10, 20 years?”

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