Feb 17, 2021
4 Important Financial Questions to Ask Yourself
It all starts with learning about what matters most and how to get closer to obtaining that goal, but are you asking the right questions? Before putting together a roadmap, it’s a good idea to know where you want to go. Checking in with yourself regarding where you are on your financial journey should be something built into your financial plan and practiced regularly. Here are five important questions about money to get you started.
Do I have enough put away for an emergency?
It’s often difficult to think of challenging financial situations like losing a job or dealing with large unexpected costs, but doing so helps you better prepare in case of an emergency. Look at your budget and expenses and assess what you're comfortable putting away towards your emergency fund. The general rule is to save three to six months worth of your current expenses but if that’s proving to be a challenge, always save what you can.
What are my long and short term goals?
Short term goals are usually action items you can accomplish within months to a few years. Prioritize your goals around your everyday expenses and timelines. Paying off credit card debt, building an emergency fund or planning for a wedding are some examples of short-term goals. Accomplishing these shorter goals builds a better sense of determination when it comes to helping you achieve long-term goals which can span from years to a few decades. Long term goals focus on the big picture things in life like paying off a mortgage or looking towards your future and saving for a child’s education fund.
Am I saving what I need for retirement?
This is an important long-term goal that should be on everyone’s financial path. What sort of retirement are you looking forward to? Depending on your desired annual living expenses and your current income and costs, you’ll want to talk to a financial planner to better estimate what you’ll need to be saving in order to get where you want to be in your golden years.
What are my biggest financial obstacles?
Now that you have a destination, it’s a good idea to take a look at the map for any roadblocks that will hinder your financial journey. If you’re not saving enough, look at your spending and where you're allocating your money. Are there areas where you can cut costs or improve spending habits? Do you need more income? Once you’ve identified the issues, you can start working on ways to clear your path to a better future.