Wherever you stand financially, there are some important financial questions to ask yourself today in order to flush out any problem areas.
Whether you want to save more money, pay off debt, or achieve certain financial goals, you can use these questions to review your overall financial health and plan. Even if you have a quick answer to most or all of these questions, chances are good that you have at least a couple financial mental blocks. Tasks that you are putting off or refusing to think about because it’s overwhelming, time consuming, you aren’t sure what to do or simply don’t want to face the issue.
Contents and Quick Links
- 1 The important financial questions to ask yourself today:
- 1.1 #1: How much money do I make every month? (Or we if you are married and combine finances)
- 1.2 #2: How much of that income is take home?
- 1.3 #3: How much do I spend every month?
- 1.4 #4: How much do I have in debt?
- 1.5 #5: What is the interest rate I pay every month for each debt?
- 1.6 #6: What is my plan to pay off that debt?
- 1.7 #7: How long will it take to pay off all debt?
- 1.8 #8: What are my financial goals?
- 1.9 #9: How will I achieve my financial goals?
- 1.10 Subscribe to the fi&wine Newsletter
- 1.11 #10: What retirement accounts do I have and how much do I contribute?
- 1.12 #11: Are there retirement accounts I have forgotten about?
- 1.13 #12: Why is facing my finances challenging? Or, why do I not focus on my finances more?
- 1.14 #13: What was my financial upbringing and how does this influence my finances today?
- 1.15 #14: How do you feel about that? Would it help to change your financial mindset?
- 1.16 #15: How can I learn more?
- 2 Recap:
- 3 Action Steps:
Don’t let overwhelm prevent you from reaching your financial goals
Choosing to simply not deal with these financial tasks is akin to not going to the doctor when you know you should. It may be uncomfortable, but with the right resources and a plan in place, you’ll feel much better after. Just like your physical wellbeing, your financial wellbeing is important and not to be ignored.
Allow me to make this task easier. Here is a list of those tough but important financial questions to ask yourself today in order to ensure a comfortable and healthy financial future. First, read through them, along with a description of why they are important and the steps to go about answering each question. Get a feel for which questions you need to go back to and spend some time on.
Second, schedule a block of time to sit down and go through each of these questions in detail. Actually follow the steps and write out answers to each one. This could take 30 minutes, it could take a few days or even months to start tracking your finances. But the benefits are priceless.
Seriously. Priceless. If you could save more money and free up time to spend on the people and activities that you love, would you? This is the first step to making that future happen.
Without further delay, here they are:
The important financial questions to ask yourself today:
#1: How much money do I make every month? (Or we if you are married and combine finances)
You probably know how much you make in a year, or what you claimed on your taxes last year, or even what your hourly rate is, but do you know what that breaks down to every month?
Pull up your latest paycheck and check what the total pay was, before any deductions for taxes, healthcare, retirement savings, FSA, etc.. Next, do the same for a few paychecks so that you have the average earnings over the last three months. Be sure to also include any additional forms of income.
If you are married and combine finances, include total income for both of you.
Knowing this number is important when you compare it to the amount of money you actually have to spend every month.
#2: How much of that income is take home?
Once you know how much you are earning each month, take a look at how much money is actually deposited into your account for spending every month.
Here is where you may be surprised by the discrepancy between total income and take home pay. Review how much money is withheld from paychecks and why.
#3: How much do I spend every month?
This is a more time consuming step, but well worth your efforts.
For some guidance on tracking monthly expenses, check out How To: Track Your Personal Finances.
You’ll want to flush out any hidden recurring expenses that are charged automatically and quickly forgotten about. If you use auto bill pay, review those expenses as well. Often service charges increase each year without notice, a quick phone call can reset these price changes.
Track your monthly expenses for the last three months and then take an average to get a feel for what you are spending over an average month.
Once you know what your take home pay is, and your expenses, you can calculate how much you have left over, or, how much you are overspending.
Note: Don’t forget to include all credit card transactions!
#4: How much do I have in debt?
Debt isn’t something most of us are proud of. Whether it’s student loans or past credit card overspending, hiding from your debts doesn’t make them go away. It might be emotionally challenging to face the reality, but doing so, and then taking control and methodically paying them down, will feel a whole lot better.
So, think back to any and all debt that you have collected over the years, including money borrowed from friends and family, and make a list of what that debt is, what is left to pay and what you are paying every month.
#5: What is the interest rate I pay every month for each debt?
Now that you have a list of all your debts, look up what the interest rate is for each account. It’s important to know what that rate is and how much you are paying every month just in interest and principal (the amount you pay that goes towards paying off the total owed).
#6: What is my plan to pay off that debt?
Once you know what your debts are and the interest rate for each, you can develop a plan of attack.
There are two methods to go about methodically paying off debt. There is the avalanche method and the snowball method. For more information on these methods, check out 5 Simple Steps to Financial Independence.
#7: How long will it take to pay off all debt?
Once you know how much money you have left over after all expenses, and what all your debts are, you can plan exactly how much money you can apply towards paying that debt down as well as how long it will take to do this. Be sure to map out your payoff date and put it on the calendar. This is an exciting day!
#8: What are my financial goals?
If you don’t have clearly defined financial goals, the chances of making progress and achieving those goals is small. Some example goals would be:
- Debt payoff
- Savings for a home
- A new toy
It’s important to have these goals so that you can work out a plan to successfully save accordingly.
For more info on clearly defining your goals for success, see 7 Steps to Successful Goal Setting.
#9: How will I achieve my financial goals?
Which leads into this next question, how will you actually save to achieve your financial goals? While the first step is clearly defining these goals, the next step is working out a plan to save money every month, invest to help that savings grow, and establish a realistic timeline to achieve these goals.
If the goal is saving for your child’s college, now is a good time to run the numbers and determine how much you need to be saving every month to achieve this. There are a number of ways to go about this, be it investing in a personal investment account and purchasing index funds to grow your savings over time, investing in a real estate rental property in order to sell or refinance when your child is in college, or investing in a college fund with tax benefits, it’s never too early to pick your method of savings and a clear timeline for success.
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#10: What retirement accounts do I have and how much do I contribute?
Take some time to look at your current retirement account. If it is through your employer, how much are you contributing and are you maximizing employer contributions? If you aren’t, do this now. After all, it’s free money!
Determine if you are able to contribute more every month. It saves on taxes and you benefit more from compounding interest. A little extra saved now adds up to a whole lot more earned in the future. Companies such as Fidelity offer tools to see a savings progression over time based on different contribution amounts. An extra investment of 3-5% of every paycheck could mean retiring years earlier. And since you already answered question #3, you know how much money you have left over to invest every month without impacting your monthly expenses.
#11: Are there retirement accounts I have forgotten about?
If you have worked for multiple companies, you may have a scattering of retirement accounts that weren’t transferred over to your new work account. Now is the time to think back and locate any missing accounts, call them up and start the process of consolidating retirement accounts.
There are multiple reasons to combine all of these similar accounts. It makes tracking easier, saves time and effort when filing taxes, it’s better for beneficiaries that may need to deal with these accounts, there are less fees and it makes managing and contributing easier. Also, combining provides a much clearer picture of what you have saved and how to adjust your retirement savings goals accordingly.
#12: Why is facing my finances challenging? Or, why do I not focus on my finances more?
Have you found that answering any of these questions is difficult? Are there any financial mental blocks that you just don’t want to face? There is likely a reason behind any negative financial emotions you encounter as you review your numbers. It could be that you were raised without much of a financial education and this is hard for you to learn now as an adult. Or, there could be some past mistakes that are embarrassing and you wish you could just hide from them. Maybe it’s an underlying aversion to math and spreadsheets! But this is your life. Embrace your finances now to ensure a secure financial future.
Overcoming your financial challenges starts with the understanding of where they come from. Come to peace with them. If you made some mistakes, that’s okay. Mistakes happen so you can learn from them and know what not to do next time around. You can fix past mistakes. You can educate yourself to make forward progress.
These questions will get you started and organized and help to separate out the emotions so you can simply take action.
Once you take action and have information about where you stand financially, it will be easier to make this a new habit. Continue to track and monitor your finances. Set those goals and plan out how to achieve them. If it’s still hard for you, think about why that is. Once you know the issue, you can find a solution. Even if that means hiring an accountant to do this for you!
#13: What was my financial upbringing and how does this influence my finances today?
*This post may contain affiliate links. Please read my disclaimer page for more information.*
How we are raised to view money impacts how we treat money later on.
In the book Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth, by T. Harv Eker, there is a whole chapter on how your money blueprint effects how financially successful you are likely to be.
“You were taught how to think and act when it comes to money. These teachings become your conditioning, which becomes automatic responses that run you for the rest of your life. Unless, of course, you intercede and revise your mind’s money files.”
In other words, you have to change your inner programming before you can change your financial results.
If you were raised to view money as something evil, something that caused no end of arguing in the household, it is more likely that you won’t be very good and holding onto and saving your money. But change is certainly possible. It starts with the understanding of where your beliefs came from and why you want to change them.
To read further about how the wealthy think about money differently, check out T. Harv Eker’s book: Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth.
#14: How do you feel about that? Would it help to change your financial mindset?
If your financial upbringing wasn’t ideal and you don’t have a productive mindset to move forward and take control of your finances, think about what it will take to help.
A good place to start is educating yourself and put a system in place to write out your financial goals and track them regularly.
#15: How can I learn more?
This is the easy part. Read, take action, revisit your plan regularly. Start with these questions, track your finances, monitor your progress. I promise, you will learn so much along the way.
- FI & Wine!
- Other personal finance blogs (search based on where you are now and what you want to learn about specifically)
- Be open and discuss finances with friends and family that you admire. Is there someone that seems to have finances in order? Learn from them. Money shouldn’t be such a taboo topic. Once you broach the subject, you’d be surprised how open people are.
If you happen to love reading as much as I do, here are some useful books that I have personally read, loved and learned from:
Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth
Set for Life: Dominate Life, Money, and the American Dream.
Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Fully Revised and Updated for 2018
Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong
Think and Grow Rich: The Original, an Official Publication of The Napoleon Hill Foundation
Here are the 15 important financial questions to ask yourself today, in one concise list:
- How much money do I make every month? (Or we if you are married and combine finances)
- Of that income, how much is take home?
- What do I spend every month?
- How much do I have in debt?
- What is the interest rate I pay every month for each debt?
- What is my plan to pay off that debt?
- How long will it take to pay off all debt?
- What are my financial goals?
- How will I achieve my financial goals?
- What retirement accounts do I have and how much do I contribute?
- Are there retirement accounts I have forgotten about?
- Why is facing my finances challenging? Or, why do I not focus on my finances more?
- What was my financial upbringing and how does this influence my finances today?
- How do you feel about that? Would it help to change your financial mindset?
- How can I learn more?
I really try to include action steps for every article that I write. Afterall, what is the point in furthering your financial education if you don’t actually act on it? Some posts are more “food for thought” and don’t require concerted action. This is NOT one of them.
Right now, block off some time on your schedule to go through these questions in greater detail. Have your computer (and spreadsheet) and all your banking account info handy. Next, start at question #1 and go through the list, answering each question as you go. The questions are in order so you should know the answer to the first question before moving on to the next.
If you haven’t started tracking your finances already, visit this blog post How To: Track Your Personal Finances for more details to get started. Also, join my email list for weekly newsletters and updates, but especially for the free financial checklists that you can download and use to help with this process. There is an additional free workbook that you will receive that helps with all the steps required to start tracking your finances. This step is so important to your financial plan, goals and journey. You can’t answer any financial questions without having all the data.
Good luck and let me know how it goes!
Know anyone else that can find benefit from answering these financial questions? Be sure to share on your favorite social media platform!