Sure, financial stability is important. But why? Obviously, it's responsible and it gives you options, but that's a pretty vague reason. To draft a better financial plan, ask yourself what money really means to you, individually.
Photo by Alexey Krasavin
Most of us reach a point in our lives where we want to take a harder look at our money situation. We want to come up with a plan to get our finances in order.
In his book, The One-Page Financial Plan, writer and financial planner Carl Richards says it's important to ask yourself "Why?" during the planning process. In fact, keep asking "Why?" until you get a personalised answer about what money means to you as an individual. You want to learn why, specifically, money is important to you.
Your initial answer might be freedom — that's common. But freedom from what? Maybe you want to spend less time working so you have more time to yourself. But why do you want more time yourself? What would you do with it? The answer will be different for everyone, but that's kind of the point. Whatever your answer, that should be the foundation of your financial plan. Richards explains:
The purpose of asking "Why?" isn't to come up with specific goals or plans of action. It's meant to reveal the reason why you have certain goals. Expect the first answers to come fairly easily. But give yourself time to pause and really think; by doing so, you can go even deeper, getting much close to what's most important. Once you've hit upon your "most important thing," you'll have a tool that will help you make lots of decisions going forward…"
When I was in debt, I wanted to get my finances in order. Why? Because I wanted to stop worrying. I had other things I wanted to do with my life, like take on a different career. Ultimately, I wanted to get my finances straight so I could pursue my goal of writing for a living. This gave my finances a sense of purpose — and it kept me motivated.
It's a lot easier to make responsible financial decisions when there's something in it for you, and knowing what money means to you can help you figure out what that "something" is. You can check Richards' book out at the link below.