While there are countless ways to get your finances in order, it all starts with learning what’s important to you and your family: What are your priorities, what are your values? Once you’ve established that, the steps you need to take should become more clear.
To get a better understanding of what’s important to you, here are 31 questions courtesy of Jonathan Clements, a former personal finance columnist for The Wall Street Journal and current editor of Humble Dollar, about “squeez[ing] maximum happiness from your spending” and pursuing the goals that matter:
- If money were no object, what would you change about your life?
- What are your top financial worries?
- What are the three smartest financial moves you’ve ever made?
- What do you consider your three biggest financial mistakes?
- How much financial help should you give a child?
- When in your life were you happiest, what made it a happy time — and what role, if any, did money play?
- What’s the minimum amount of money you need each month to keep your financial life afloat?
- If you were out of work, how long could you cover expenses before having to take drastic financial steps?
- What did you learn about money from your parents — and which of these beliefs have you adopted as your own?
- Think of three people you know who are in great financial shape. What have been the keys to their financial success?
- Is it important to you to drive a nice car and, if so, why?
- In the typical week, which moments do you enjoy the most — and which do you dislike the most?
- Is getting rich one of your overriding life goals?
- Think about your weaknesses. Are they acceptable human failings — or are they inflicting major damage, including major financial damage?
- Who depends on you financially — and how would they cope if you suffered an untimely demise?
- When is it OK to go into debt?
- Think about your life’s major expenditures, like buying homes, purchasing cars, remodeling projects, expensive vacations and paying for college. Which are most likely to make you smile and which ones disappointed you?
- What’s on your wish list for major expenditures in the years ahead?
- Do you believe a home is a good investment? Why?
- What’s your net worth — the value of everything you own, minus all debt?
- Does your stock-bond mix reflect your paycheck or lack thereof?
- Imagine your perfect retirement day. How would you spend it — and would you be happy doing these things every day for the rest of your life?
- Are there children — either your own or somebody else’s — whom you’d like to help financially, and what sort of assistance would you like to provide?
- In late 2008 and early 2009, did you buy stocks, sell or sit tight?
- How much do you pay in investment costs each year?
- If you weren’t burdened by the knowledge of what you hold, what you sold and how markets have fared, would you own your current portfolio?
- If you take your bonds and other interest-paying investments, and subtract all your debts, what’s your net bond position?
- Are you on track to have all debt paid off by retirement?
- If you died tomorrow, would you bequeath a mess?
- When was the last time you talked honestly about your finances with somebody?
- If you were writing your own obituary, what accomplishments would you include? In the years ahead, what further accomplishments would you like to add?
Some of these won’t apply to everyone, but virtually all of them are good thought experiments: Do you think buying a home is a good investment for you and your family? What is it, exactly that you’re trying to accomplish in your one life, and how does money play a role in that? Who are the people who depend on you, and how much do you believe you owe them?
Take the time, either by yourself or with your spouse or other decision-makers in your life, to answer a few, if not all, of the questions above. Not only will they give you clarity, but they’ll help shape a path forward to financial freedom, whatever that means to you.
This article has been updated since its original publication.