4 Critical Money Questions You Need to AskSubmitted by MacDev Financial Group on October 30th, 2018
Having a successful financial strategy that aligns with your life goals and puts you in control involves asking the right questions and examining your views, attitudes, and beliefs about money from a deeper, holistic perspective. These four critical money questions are a good place to start.
What is my money mindset?
Your money mindset is what you think about money. Do you have an abundance mentality or a scarcity mentality? Do you stress over money and worry about whether you will have enough for the future? Do you budget relentlessly, always finding ways to scrimp and save? If you feel the lack of money in your life all the time, you have a scarcity mentality. A scarcity mentality believes the money supply is limited, and there are not enough resources to go around. When you have a scarcity mentality, you settle for your lot in life.
An abundance mentality does not feel lack and has confidence there is enough money to be made for everyone; resources are infinite, not finite. When you have an abundance mentality, you feel empowered to make money and are better equipped to achieve financial control for life. No one shrinks their way to wealth. Wealth is about expansion, not shrinkage.
And here is another point to think about! Having a scarcity or abundance mentality is a way of thinking that trickles into other areas of your life, not just your finances.
What are my financial values?
Your financial values are basically how you view money and the role it plays in your life. What’s important to you about money? Does money give you the ability to accumulate the things you want such as material possessions, or do you value creating experiences more? Does money give you more opportunity, freedom, choices, greater flexibility, protection, and security?
These are just a few of the financial values you may have about money. Whatever financial strategy you put in place, you want it to be congruent with your values, but you need to know what those values are first. For example, if you’re values are protection and security, then you will want your financial plan to mirror those values with investments that offer long-term, secure growth and an insurance plan that protects your assets, family, and business.
What influences have shaped my financial beliefs and attitudes?
Much of what we learn about money is dictated by what we taught by our parents. In fact, much of our money mindset is probably shaped by what we learned as children at home directly observing our parent's relationship to and success with money. Did they always financially struggle and budget or were they prosperous and living abundantly? You are likely to adopt the money mindset your parents had.
Our money mindset can also be influenced by what we have experienced through economic or cultural shifts. Many of our grandparents and perhaps even our parents, succumbed to Depression-era thinking because of living through scarcity times where there was a lack of food and jobs. This type of scarcity mentality thinking becomes so pervasive, it gets passed down from one generation to the next, even lingering for generations.
Today's millennial generation watched their parents get financially wiped out during the 2008 market crash. As a result, they’re leery about using credit and accumulating debt. They’re also much more advert to working for themselves and spending their money on experiences rather than things (since those things can be easily taken away).
As we get older, a lot of our financial beliefs are shaped directly from advice we receive from big banks and financial institutions. Much of what we’re taught by the financial industry is one-way thinking that serves the capital needs of the industry itself, particularly in terms of retirement planning, saving for your child's education and purchasing a home. A lot of this advice is built around scarcity mentality thinking that preys on our fear of the future and not having enough, to the expense we don’t allow ourselves to enjoy our lives in the present.
What money myths have I been “financially blinded” by?
Since much of our financial education is shaped by big banks and financial institutions, we’ve been conditioned to think about money, investing and financial planning is very predictable ways.
One of the biggest myths many of us have fallen for is investing our money is the best way to save our money, when this is the furthest thing from the truth. Investing is taking on risk and volatility where you can lose your money. We have also been conditioned to think that saving money does not grow our money. It’s seen as “lazy” money. However, there are long-term savings strategies on the market today that are secure and provide you with guaranteed returns year over the year such as certain whole life insurance policies.
Other money myths we have been duped by the financial industry on, is the average rate of return vs. magnitude of return on our investments, and the accumulation versus distribution phase of our investments (growth phase = versus liquidation phase).
To learn more about these money myths and concepts discussed in the blog, watch Do You Have Financial Control for Life?
Disclaimer: This information is given for informational or educational purposes only. All financial endeavors should be vetted through a financial professional; example, life insurance broker, financial but not limited to its agents, staff, associates and/or partners will not assume any liability for any information printed in this article; indirectly, or assumed.