What drives you?
With each of my clients, this is the most important exercise we do. It’s helpful to do this with someone: a partner, close friend, or your financial planner. They can ask questions that get to the root of “why” you want to save, or invest, or set your children up for success. Once you know those reasons, the rest of your plan becomes straightforward.
Here’s an example to illustrate:
Jack wants to save up for a house. He feels overwhelmed by the home buying process and doesn’t fully understand how this will impact his finances.
He said he has tried on multiple occasions to save for a down payment, but each time something else came up in which he spent the down payment funds and had to start over. He feels guilt and anxiety because buying a home is important to him and he just can’t seem to work through the financial process.
A powerful question is simply, “What about buying a house is important to you?”
If the answer is something like, “I want to stop renting and actually own my property,” go a step further and ask, “What does owning your own property mean to you?”
In Jack’s case, it came out that he grew up in a household that moved around a lot. Each time he moved, he had to get rid of many of his things, moved away from friends, and felt like he had no control over his life.
For Jack, buying a home isn’t just a practical desire — it’s an emotional desire for stability.
After this discovery, it makes the planning process so much easier. For Jack, establishing an emergency fund first helped provide some immediate stability knowing that his goal funds are protected. After the emergency fund is established, it becomes far easier to save up for a home (and reduce his risk in the process!)
Most people aren’t fully aware of why their goals are important to them until working through this process.
A few quick notes:
This process may take time. Give yourself the room you need to work through this mentally.
When feeling stuck, ask someone you trust to go through this process with you. It’s easier to get to the root of these topics during conversation.
Be prepared to be surprised by your answers. Sometimes our core desires are not what we originally think.
Once you’ve determined your “why,” make sure to write it down!
One of my favorite outcomes of this process is that it serves as the benchmark for all financial decisions. Our “why” becomes our financial North Star. A simple, often one or two sentence beacon in which to judge every other decision.
More often than not, people discover that their current purchasing decisions don’t fully align with their goal. And that’s why this is so powerful: It sheds light on how to direct our money towards that guiding light.
Quote of the week:
Opportunity is missed by most people because it is dressed in overalls and looks like work.
-Thomas Edison