The Choices We Make: 7 questions to ask ourselves
We are confronted with thousands of decisions daily. Many of them are rather mundane and basic like what time to get up in the morning, what to have for breakfast, which direction to drive to work, etc. Some are placed upon us by the expectations of others, whether family or work situations. However, many are trade-offs between needs and wants like “I need transportation, but I want a Corvette,” or “I need nourishment, but I want to eat at that nice, new restaurant everyone is talking about,” or “I need to communicate with people reliably, but I want the new iPhone.”
If we make these decisions without much thought, like the rest of our mundane decisions, we often prioritize our wants ahead of our needs. Almost every decision we make has a financial or money component to it, and when we chase our wants instead of needs, we may suddenly find ourselves in a very uncomfortable, stress-filled situation as we try to live beyond our means.
To help us make better money choices, to prioritize the most important things in life, here are 7 questions to think through before and during our decision process:
- What are your beliefs about money? Is money good or evil? What is its purpose?
- Under what circumstances is it ok to use debt, be in debt, or carry debt? Is there good and bad debt?
- What are your financial or money goals? Provide for your family? Your future? Retire early? Give generously? Not live “paycheck to paycheck?”
- What are your thoughts about living below your means (spend less than you make)? Are you willing to put together and follow a spending plan?
- How important is it to put together a savings and giving plan?
- How likely are you to let your “wants” get in the way of achieving your goals?
- What sacrifices are you willing to make to achieve your goals?
Now, based on your answers to these questions, you have two basic questions to ask yourself every time you start to spend money. Don’t worry, they’re easy and will become very natural after a short time.
First, am I making this purchase to satisfy a want or a need?
Needs are essential. You need food, shelter, transportation, and utilities. Corvettes, iPhones, and eating out are wants. As you approach each purchase, ask yourself, need or want?
Second, does this purchase take me closer to or further away from my goals?
This is the trade-off question. I can choose to make this purchase, or I can put the money in my savings account, my investment account, or give it to someone who needs it. I can only do one thing with the money, so I must determine what the highest priority is in the moment.
Your beliefs about money will determine your behaviors with money, which in turn leads to your results. If you don’t like the results, start examining your beliefs so that you can change your behaviors. Then prioritize your spending in a way that will allow you to achieve your financial goals.
If you’d like some help with clarifying and reaching your financial goals, reach out to Jim@JimHortonJr.com. fff