What are the 3 most important questions I can ask about my money?

Transcript:

Hey, humans! I’m Michael Liersch. This is the About Money podcast, presented by Wells Fargo. I’m a behavioral scientist, with a PhD in cognitive psychology who loves openly discussing money to help humans better understand their money behaviors. By understanding our money behaviors, we all have the opportunity to make better money decisions.

In this season, we’re going to talk about how we can all sync up our life and our money. We call it LifeSync^®. You might be asking yourself, why does LifeSync matter? Well, when we align what we want to accomplish in life with our money, it can clarify whether money is truly working hard for us to get us to where we want to go. But that requires us to be intentional about what we want in our life, the jobs we want money to do for us, and compare it with how our money’s organized both now and in the future. To that end, we’re going to keep each episode under 10 minutes, so that you can take immediate action to LifeSync. So let’s get into it.

In this episode, we’re going to answer the question, what are the three most important questions I can ask myself about my money? Why? Well, to begin the LifeSync process, we need to get more intentional about our money. But interestingly enough, that process doesn’t start with the money itself. It starts with what we value most. Remember, money at the end of the day is simply a representation of stored value created at some prior point in time. So think of maybe a father or mother who worked hard, and they gave you some money. Think of yourself. You worked hard in the past, and you stored that money in a bank account, an investment account. So we want to make the most of our money now and in the future, it makes sense to start with the values around that money rather than the dollars and the cents themselves.

So to get really tactical, I just want you to get started right now. You can either think about this, you could get out a pen and paper. Whatever works for you, but ultimately I do think it’s really critical, and behavioral science highlights how critical it is, to actually write things down because it creates commitment. So as I ask you the three most important questions that you should be asking yourself about your money, I really encourage you to not just write down those questions, but write down those answers, and use that as that commitment to really find out for yourself the truth in those answers. And we’ll get into that in just a second.

So here’s the first question: What is the number one job that you want to get done with your money? In other words, I want you to think about what matters most? That’s going to be your most important value. And so for some people, they might say it’s retirement. Maybe it’s helping out their family. Maybe it’s making a big purchase. Think about that number one job you want to get done. Write it down, right now.

The second question I want you to ask yourself and answer is: Do you have enough to get that job done? You can just write down just enough, meaning you think you’re just on the edge of having enough, you have more than enough, meaning you have excess value, excess money beyond that number one job, or not enough to get that job done, which would mean you’re concerned there’s not enough stored value, money, to get what you want to get done most in your life. And then I want you to think about in that context, as you think about whether you have enough, depending on your answer, it’ll highlight whether you truly are aligning your money, you know, that’s the “enough” part, with your values, and that’s the job you want to get done. And that’s really an intense and frankly a deep thought for you to consider.

Which gets to the third question: Who should you share this information with? Is it a parent, a child, a spouse, a partner, a friend, another family member, like a brother or sister, a professional? You know, a professional advisor? Because what’s interesting is, if you say nobody, that makes it much more difficult then to follow through with those commitments. Because the commitment is just in your mind. It’s not documented. You’re not tracking it. It becomes diffuse or loose. And so you want to make it concrete, specific. You want to share that with someone else because they can become an accountability partner for you, to make sure that you really are living your values with your money.

So what I’d like you to do next, I’d like you to take those answers and refine them a bit. So think of that number one job. Are there more details you’d like to put in there? So, for example, we did a recent study with humans under 40 years old, and they said that their own primary goal — and they actually also highlighted what they thought their parents’ primary goal was too — was enjoying a comfortable and worry-free life. So I want you to think about that. If that was your number one job, something like that, so something about your lifestyle, not running out of money, whatever that is, get specific. What are the dollar amounts, the specific dollar amounts that you’re talking about? In terms of your monthly spend, your annual spend, you know, that makes that lifestyle, that worry-free life, happen. If it’s about providing for your family, maybe education, what are the actual specific dollar amounts that you’re talking about? And then I want you to think about also writing down when. When do you need that money? Is it every year? Is it every month? Or is it at some point in the future you’re going to need it for a certain period of time? So perhaps maybe you’re still working, and we’re talking about something like retirement. Write down the dollar amounts and when you need it, and for how long you need it for. Then getting that specific will enable you not to fudge it. You’re not playing around now. You have those specifics. And then you can go to being truly authentic with yourself around whether you have enough: just enough, more than enough, or not enough.

And you can think about now that you’ve written that down, you look at what you have, what you will have. Is there a match or a mismatch here? Is there something to be done, and then you can really be concrete about your priorities of who you want to share this information with. Because if you need help, then perhaps it is a professional advisor. It is a spouse or a partner, an accountability partner, to keep you all on track. If you have more than enough, maybe you’re going to need to share that with someone who’ll be on the receiving end of that excess value, that excess money. And you should share that with them and help them understand what that means to you, how hard you worked for it, what your expectations around that money is. If you’re just on the cusp, if you just have enough, perhaps you need then to come up with a routine to make sure that you stay on track. Because any kind of an emergency or unexpected event could send you off track. Or any great event could actually give you the opportunity to live a more carefree life, or give to other people, whatever that may be. So really, really be deliberate about it because it’ll help you prioritize who you should be talking to, working with, to make sure that you’re living your values, you have enough, and you’re staying on track with what you’d like to accomplish with your money.

That’s it for this episode of the About Money podcast. Please email us with the topics that you would like us to address at AboutMoney@wellsfargo.com. And if you really liked the episode, share it with family, friends, and anyone who listens to podcasts. About Money is produced by Wells Fargo. You can learn more about ways to work with us at wellsfargo.com/aboutmoney. I’m Michael Liersch, asking you to talk about money today.

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