Why is Money Important to YOU?

That is the main question Carl Richards asks in his best-selling book, “The One-Page Financial Plan.” It is not a new book, but one I had not read until recently. It only took me a few hours to complete, but it certainly gave me pause when I read this question: “Why is Money Important to Me?” Honestly, it was something I had never truly thought about, but it gets to the core of the decisions we make about money and sets the stage for determining our goals and ultimately, why we all need to have a financial plan. Any plan is meaningless if we do not know the purpose behind it.

Your initial answer to the question I posed might be somewhat vague, such as “freedom”, which was my default. Some other common answers are “security” or “control.” These are a fine start, but he encourages us to dive deeper, and deeper is what I did! To answer this question in a more meaningful way, Carl suggests asking some additional “Why’s?” Money and time are two good starting points. “Why do I spend so much money on ‘x’?” and “Why do I spend so much time doing ‘x’?” To go through this exercise and to begin to set actionable goals, we must know the answers to these questions. Ensure you give yourself the appropriate time and space to think about your responses. This is not a one-size-fits-all approach nor are there any right or wrong answers. As a matter of fact, you will probably make several guesses or need to brainstorm for some time to really get to the heart of what is most important to you.

Why Do I Spend So Much Money On ‘X’?

This question is about our values and our priorities. For me, it’s travel. Why? Because I value and prioritize experiences over things. For you, it could be your children, education, or a hobby. The answer should not require you to pour over bank and credit card statements. That is not the point of this exercise. The real question is, “Why?” Why do you spend so much money on your hobby? Perhaps it provides some satisfaction, is something you enjoy doing, and you could turn it into a profitable business someday. Here, we answered what you spend your money on, why you do it, and found a goal that we can use to begin to build your financial plan.

Why Do I Spend So Much Time Doing ‘X’?

This may or may not be the same answer as the previous question. For me, it’s reading and writing, particularly about personal finance. I enjoy educating myself and others about budgeting, cash flow, investments, retirement, and similar topics because schools and colleges do an inadequate job of preparing us for real world financial decisions. This lead me to save money to start my own financial planning firm, Xennial Planning, which provides financial planning services specifically tailored to Millennial and Generation X career-focused women. Where do you focus your time and effort? I assume it is something you enjoy. If not, perhaps it is time to do some soul-searching.

Why, Why, Why?

Why should you go through this exercise? Well, if you do not have a solid understanding of where you are, where you want to be, and most importantly, why, it will be very difficult to not only set goals, but develop a plan and stick to it. Most of us want a solution before we diagnosis the problem. A “quick fix” per se. You cannot expect your mechanic to fix your car if she does not know what is happening and why the problem exists.

Patience is key and if you have not done so already, read Carl Richard’s book, “The One-Page Financial Plan.” It is a quick read and will begin to help you make better decisions about your money and understand why you are making those decisions so you can start to build a plan that is all about YOU. One final note... if you are looking for a financial planner and the first thing she does is offer to sell you a $1M life insurance policy, you should walk away. Remember, we must diagnosis the underlying issue first before offering a solution. All of the other stuff comes later.