Reflecting on our own relationship with money is not a trivial task because budgeting has implications for many aspects of our lives (e.g., plans/experiences needing financing needs, retirement, health care, or spousal arrangements). In addition, good personal finance management starts with understanding the individual situation and we usually pay too little attention to the emotional aspects of money. This should not be an obsession, but careful consideration can have a lasting positive impact on our lives.
The suggestion here is to understand better your psychological situation through an objective self-assessment. There is no right or wrong answer, but this reflection will allow you to be aware of your preferences and character traits (e.g., hedonistic/expensive or stoic/sparing profile). You can use this assessment to initiate or adjust a financial plan, to begin a self-therapy, or to uncover sources of conflict in managing a spouse’s money. Although it can be a difficult process (e.g., when painful experiences resurface) or feel like a lengthy exercise, it can be extremely helpful in healing unsustainable financial behaviors.
The core and first part of the questionnaires focus on your relationship with spending and saving, your priorities in life in relation to money, and your current financial situation in order to take corresponding action. In the second part, broader psychological and philosophical questions will help you reflect on your values, lifestyle and relationships.
- Part 1: Questions about your relationship to money, taking into account your life plan and situation.
- Part 2: Broader psychological and philosophical questions
To get the most out of the questionnaire, we suggest that you first quickly skim Part 1. Then answer the questions in Part 2. These deeper questions will help you assess your relationship with money by including thoughts that are more holistic. Finally, return to Part 1 to continue the self-reflection in more depth.
Part 1: Relationship with money
The goal is to understand where you are weak (or strong), where you have an unhealthy approach with money and how you can improve it. It forces you to think broadly about your personal relationship with money. If you take written notes, you can reflect on this later, but the process and introspection about your priorities and financial situation is more important than the formal outcome.
The first set of questions to ask yourself about money is an essential reflection on your relationship with money.
1.1 Relationship spending and savings
1.1.1 What excites you and in what areas (such as art, culture, travel, health/fitness, freedom, relationships, self-improvement) do you think spending is most justified? Which area would you choose if you could only choose one?
Ask yourself if your answer would be different if you had no spending limits. Think about your dream life in general and, more concretely, about a typical day in your dream life (how do you wake up, what would you do, etc.). Then consider the financial implications: Would you need a lot of money to get there or could you already be taking steps to achieve the prosperity you need for your dream life? For example, could you realistically improve your income level?
1.1.2 What was the last money mistake you made (why did you make it, did you feel guilty about it and could you avoid it now)?
This is usually a spending mistake (buying something totally unnecessary), but it can also be a saving mistake when you wasted a lot of time to save nothing or gave up a frivolous purchase that would have made you happy because you are too strict with yourself. In the case of an undue expense, did you make the purchase primarily to impress someone else?
You can then look at the factors (people or emotional state) and situation of this mistake to assess the level of control you had over your spending or the forces acting on you. You can then reflect on the impact (e.g., guilt) or a potential solution by better understanding the factors or situation to prevent it from happening again.
1.1.3 Has your relationship with money changed over time?
Have there been phases in your life when you were less concerned about money (e.g., before working, early in your relationship, when not taking care of children)? Did both your parents influence your approach differently and what are your childhood memories of money (between excessive hoarding and extreme spending)? Do you think this is a healthy development? Could you reverse it? To what extent are you in harmony with your partner/spouse in terms of financial resources and types of spending?
After the savings and spending aspects, the second set of money-related questions concerns your life plans and its financial implications.
1.2 Priorities and plans in life
1.2.1 What are five things that you most enjoy doing or that have given you the best memories?
You can then ask yourself if these things are expensive. If your list includes, for example, sports, good meals, outdoor activities with children, travel, and reading, you will find that in most cases these activities do not involve large sums of money (unless the meals are in a 5luxury restaurant, for example). Other activities, fashion, art items are more expensive, but you should not avoid them if they bring you true longer-term satisfaction.
1.2.2 Where do you want to be in one, five and ten years?
While it is impossible to predict the future, it is worthwhile to have a plan of where you want to be in 1, 5 and 10 years. Thinking about these time frames allows you to set goals for what you want to achieve in all aspects of your life (so do not focus on professional accomplishments, but also include material, educational, family, health, leisure and relationship aspects in your assessment).
Having goals with a time horizon allows you to focus your efforts on activities that allow you to have a more complete life and align your decisions with the life you want. You should be intentional about cutting out the things in your life that are wasting your time today. Can you think of three actions you can take in the next week that will move you closer to this goal?
1.2.3 Do you want to retire in the traditional sense, continue to be active at the typical retirement age or retire early (FIRE type)?
In any case, you need to ask yourself if you are on a realistic savings path for what you want to do and what your sources of income (pension, investments) will be? Will they be sufficient to cover your most important needs (including health, recreation and children’s education)?
After the above forward-looking questions, the third and final set of money-related questions focuses on your current financial situation.
1.3 Financial current situation
1.3.1 Do you have a clear picture of your assets and liabilities?
If you have debts, do you have a clear picture of the payment dates, amounts and interest levels? Is it for a long-term investment such as a house or do you have unhealthy debts to cover expenses that weigh down your finances? How much control do you have over your spending? How do you feel when you get bills and after you pay them? Are large expenses (insurance, taxes, home-related bills) coming up in the short term or are larger costs that are difficult to cover expected in the next 5-10 years?
1.3.2 Are you getting the best financial results for the time you invested?
What is the net result of each hour of work you have invested (the term “net” refers to the salary or income from any activity after deducting travel, meals, taxes and any other related expenses). Also, consider how your salaried job or side hustle brings you fulfillment; conversely, do they negatively influence your health by requiring you to work late and your happiness by causing you to miss important events and milestones in children’s lives? Could you do anything differently to improve this situation (increase your income or choose more fulfilling work)?
1.3.3 What would you do if you were laid off or could no longer do your job because of some emergency?
Without worrying too much and developing negative thoughts, you can briefly answer these questions: Do you have a plan to remain employable in the long term and are you keeping your skills current to be an attractive candidate in the job market? What could you do now to mitigate this risk? Could you adjust your budget or could your spouse contribute differently? Do you have a good emergency fund (ideally at least 3-6 months of expenses)?
After these down-to-earth financial considerations, you may want to take a step back and think about the following philosophical questions, then return to the more practical considerations in Part 1.
Part 2: Broader psychological and philosophical questions
Some reflection on your goals, priorities and values in life is necessary to better assess your financial situation and goals. Money cannot bring happiness, help you understand the mystery of the universe or fulfill your needs for spirituality and mental peace. Money is there to pay the bills or achieve your material goals. However, thinking about your higher goals and true values in life will help you prioritize your financial life. Conversely, control over your capital brings freedom of movement, peace of mind or ways to eat healthily that will affect aspects of health and longevity or broader aspects of your life. Thus, this self-reflection can help you improve both the material and non-material aspects of your life.
The first questions to ask yourself are fundamental reflections on your overall life mission, life goals and values.
2.1 Mission and values
2.1.1 What is the fundamental reason for your existence (your mission), are you what you deeply desire to be? Are you pursuing happiness or other goals in life?
These questions are important because they allow you to reflect on your dreams and mission in order to identify why you are pursuing them. By clarifying your goals and purpose in life, you will be able to redirect your actions and focus your energy and motivation on what really matters, which is making decisions and prioritizing time for your mission.
2.1.2 Would your mission be different if you stopped considering all limitations, if everything was possible, or if your fears did not matter?
This question allows you to imagine a possible life without limits or fears and to see how to overcome the current obstacles. Society pushes us to follow rules and habits and you have to mentally challenge the status quo and consider things that seem out of your reach at first glance. Realistic thinking will be necessary later, but allow yourself to dream a little at first when considering your mission in life..
2.1.3 What are your values, are you faithful to them?
It is also important to have values that guide you. Values are your personal set of beliefs and ethical principles that guide your decisions and behavior. You may have received some guidance in your early years and have not thought about it since. Reflecting on it will give you a stable foundation for navigating right and wrong and the confidence to let go of things that are not important.
After this forward-looking assessment, the second set of general questions focuses on your current satisfaction with your lifestyle.
2.2 Current lifestyle
2.2.1 What are you grateful for?
Although we should always strive to improve our lives, it is important to be grateful for what we have, such as health, a place to live and eat, or a family. It is helpful to be aware of what we have and to develop a positive attitude towards life, as optimism helps to combat stress and anxiety. To avoid negative thoughts about unimportant tasks, also ask yourself this question: Will any of the causes of daily dissatisfaction matter in 5 years?
2.2.2 Do your habits and lifestyle support a healthy body and mind?
To get the most out of life, you need to adopt a lifestyle that improves your health and well-being. However, when we think of health and wellness, we think only of the physical aspect. A healthy lifestyle should focus on your physical and mental well-being as well. Good nutrition and exercise take care of your physical well-being and influence a healthy mind. Educating yourself, being curious and striving for positive thinking also promotes an elevated mind.
After this reflection on yourself, the third and final set of general questions focuses on the importance and pitfalls of interactions with others.
2.3.1 Do you care too much about the opinions of others?
We are social creatures and often feel the need to act according to societal expectations. However, this external pressure and worrying too much about what others think of you can prevent you from making the best decisions for yourself. Without becoming a misanthropic creature, thinking about this can help you determine if your social obedience is justified or if it is just adding undue pressure on yourself, in general and in specific situations.
2.3.2 Do you make enough time for the most important people?
The people around you are so important to your well-being that it is essential to assess the social circle you surround yourself with. Are these people helping you become a better person or are they bringing negative energy into your life? It is of utmost importance to spend as much time as possible with the people we value most, our family and friends, as well as those who can uplift you and help you become a more complete person.
2.3.3 What will people say about you at your funeral?
Did you live a true and full life? Asking yourself this question about your ultimate physical presence on earth will help you put your life in perspective: Is the pursuit of material things so important? Is the extra hour you spend at the office instead of spending time with your children, building a relationship, or developing respected character worth it? To build that whole, true character that people will remember after you are gone, however, you need to focus on how you feel inside, rather than how you look, avoiding extreme consumerism and a distorted image.
You should now return to Part 1 and consider whether you can change anything in your life to bring more harmony between your higher goals and your financial plans.
Note: We will update and improve this questionnaire, so please do not hesitate contact us with your suggestions to improve its future usefulness to readers. In the meantime, assess whether your investment approach is sound under https://guidefinances.com/putting-the-principles-and-the-plan-into-practice/.