Asking yourself this question is critical to your financial future
Answers Are Everywhere, Questions Are Rare
A lot of people walk through life looking for the solutions to solve all their problems, such as…
My job is boring and I hate it.
I can’t seem to find the right person to have a relationship with
My family just keeps doing everything wrong and it’s so frustrating
It can be really difficult to find the right answer in a sea of information about what is the best thing to do at any one time. Your friends telling you one thing, the media telling you another, self-help gurus trying to sell you the right book that’ll change your life and tell you the right decision to make. But instead of seeking the answers to solve your problems, another option is to try asking yourself the right questions that could spark your own answers. Once you have the right question, then the answer will be pretty obvious. (This is a great point made in a book called A Hitchhiker’s Guide to the Galaxy. It’s also one of Elon Musk’s favorite quotes, and he seems to know what he’s doing!).
“If I had an hour to solve a problem, I would spend 55 minutes thinking about the question and 5 minutes thinking about solutions.” A great quote that I found in Tribe of Mentors by Tim Ferriss
As an example, let’s say you are having financial problems saving money. At the end of each month, you don’t have any money leftover to save. Instead of searching for the answer to all your financial problems (cut back on spending, live somewhere cheaper, get a new job, etc.) try asking yourself the right question which could spark some inspiration. Everywhere you look people are trying to give you financial advice, but this may just overwhelm you and leave you with no idea what to do. Instead ask yourself, “what is the one thing I can do starting today to make sure I save some money each month?” When you ask yourself this question, a clear answer can become pretty obvious and you are likely to follow it because the answer is your own.
The answer to this question could be putting money into a savings account at the beginning of the month or when you get each paycheck.
The Most Important Question Affecting Your Financial Future
So let’s talk about one of the most important questions you can ask yourself to solve a problem just about everyone has, and that is how to plan for your financial future. You be wondering how to develop the right financial plan for you, not just some cookie-cutter plan that involves saving money, buying a house, investing in the stock market, etc.
Everyone’s financial plan should be different because not everyone is living the same life. In the personal finance world, there are resources giving out endless pieces of advice such as:
- Invest in index funds
- Build up your emergency fund
- Purchase real estate
- Pay off student loans
- Carefully budget all of your spending
And the list goes on.
So I’ll get to it. You’re probably wondering by now what is the most important question you can ask yourself to determine your own financial plan for the future.
What is the most important thing I want to do with my life in the next 5 years and what will it require financially?
This question seems simple, but the answer is different for almost every person. Consider all of the following options:
- Go to college
- Graduate school?
- Launch a business
- Start a family
- Buy a home
- Get married
- Travel the world
- Retire from your job
All of these are big life decisions that will inevitably take people in different directions and will require vastly different financial obligations. However, once you ask yourself this question and answer it, you will start to get an idea of the financial plan you’ll require and the decisions you should (or shouldn’t) make with your money.
What Do You Want To Do With Your Life?
Everyone has a different idea of what a successful and happy life looks like to them, and that is completely okay. Some people want a quiet life where they get married, buy a home and raise a happy family. Others want to travel the world and seek adventure. Then some want to pour their hearts into their life’s work with no thought given to how much money it will generate for them. Whichever path you choose, there will be money needed and a financial plan required to make sure you get to live the life of your dreams.
So how about some example answers for the question, What is the most important thing I want to do with my life in the next 5 years and what will it require financially?:
Go to Graduate School: You will need to consider the cost of tuition and living expenses for the duration of your program, what are job prospects and salaries once you graduate, how can you minimize the debt you take on. Then you probably don’t want to buy a home or plan an expensive wedding at this time.
Retire from your job: You’ll want to make sure you have enough money saved up in your retirement account and ensure that your investments are fairly risk-adverse to ensure no major losses. Then you could also consider downsizing your home or moving to cheaper location to cut expenses, and you probably don’t want to take on any major debt or make expensive purchases.
Travel the world: Start saving pure, sweet cash to finance your trip. Then consider selling some possessions or starting an online business to finance your travels. Probably not a good time to take on any debt or buy a home/real estate.
Starting a family: Possibly save up for a down payment and buy a home. Start a college tuition fund for your children. Consider the cost of childcare and whether your family could live on one income.
Indonesia, first stop for our mini-retirement
Right now my biggest life decision will be leaving my job in May 2018 for a 6-month mini-retirement where Lauren and I will be backpacking through Asia and Europe. This requires that we save a up a pretty hefty amount of cash and ensure we don’t make too many big purchases in the next few months. We will also need to make sure we have plenty of money when we get back while we look for new jobs and a place to live.
If you know clearly what you want out of life in the near future by asking yourself the right questions, then the answer to how you plan financially can become fairly easy. Asking yourself the right questions is essential to knowing what you need to do with your money and sometimes even more important to know what NOT to do with your money. Remember that in present information age that we live in, answers are everywhere. You can access just about anything you want from your smartphone. But being able to ask the right questions, well that’s where the real magic is….
What do you want to do with your life in the next 5 years and what will it require from you financially? Leave a comment or send me an email!