fbpx
U

Questions to Ask Yourself Before Making Major Financial Decisions

January 11, 2019

Ever wonder why certain people are more financially successful than others? Does it have something to do with their economic status their born into? IQ? Genetics? Behaviors? Or a combination of certain factors?

Well, as it turns out, research consistently reveals since as early as the last 1800s, that the vast majority of millionaires don’t come from millions. Research also debunks the notion that IQ or genetics is an overriding factor in financial success. What the research does find again and again is that self-control and discipline behaviors are correlated with success.

This is good news! This means that financial success is well-within your control. And the money decisions you make now can have a big and small impact on your overall financial situation. From minor purchases like clothing and household items to major purchases like a car or home, knowing the questions to ask yourself before pulling the trigger can help you make the best financial choices for you and your family.

Join us for this week’s installment of The Money Guy Show as we reveal the 8 behavioral finance questions every individual and couple should ask before making major financial decisions.

The 8 Behavioral Finance Questions To Ask Before Making Major Financial Decisions:

1. Is it a want or a need?

If you need it, make sure it’s the best option. If you want it, what is motivating your purchasing decision? Understand the fundamental natural of your purchase and then strive to factor in the true cost of that purchase – what you have to give up in order to attain it. Making sure you’re not giving up too much or compromising your future needs are important considerations before making a major financial decision. Deferring gratification is a disciplined approach to affording what you want and need without negatively impacting your financial success.

2. What is the lifespan of this decision?

In other words, is this a small, medium, or large purchase? Understanding how a financial decision today will impact you and your financial situation in the short and long-term can’t be ignored.

3. Does this purchase delay or accelerate my financial goals?

Think about whether or not a major financial purchase moves you closer to reaching your financial goals or delays you. Looking at your financial decisions with a big picture perspective can help you prioritize which purchases you make and when you make them. If a purchase does not align with your financial goals and, instead, significantly derails your progress toward achieving it, then is it really the right financial decision?

4. Have I conquered my budget and am I living within my means?

Before you make major financial decisions, do you have fundamental money management practices down? Meaning, have you made a plan for your army of dollar bills so that you effectively fund what is important to you without spending in excess of what you have?

5. Have I educated myself enough on this purchase or investment?

Did you do your homework? Don’t make impulsive financial decisions. Time and research allows you to understand your purchases and their impact on your finances.

6. Who or what is influencing this decision?

Consider what or who is influencing your financial decisions. Making major financial decisions based on the perception of others can be disastrous. Trying to keep up with the Joneses hardly yields financial successful outcomes. But, if you have a financial advisor who is helping to counsel you through a large purchasing decision, you are likely to feel more assured that you’re making a smart financial choice that considers all the factors.

7. If something happened, would my family be OK?

If you make this financial purchase, and something happened, would you still be able to provide for your family? If the answer is, “no” then you should re-evaluate your finances and take steps to ensure that they would be. Having sufficient insurance coverage and estate planning affairs in order protects you and your loved ones.

8. How do I make sure my kids won’t fail financially?

Are you modeling behaviors that lead to financial success? And are you taking advantage of planning opportunities to set your children up for financial success and then able to maintain it on their own?

At the end of the day, if your financial decisions align with your priorities and long-term vision for your life, which provides a good guide for your financial choices that motivates wise financial behaviors.

Resources Mentioned in this Episode & Related Episodes

Enjoy the Show?

Tune In and Go Beyond Common Sense with the Money Guys

This show would not be what it is today without the support of our wonderful listeners. We strive to continue making the show better and your feedback is an important part of that process.

If you have any questions/suggestions/comments/concerns (or just want to say hi!), feel free to reach out to us: [email protected] and [email protected] You can also join the conversation on Facebook or connect on Twitter @MoneyGuyPodcast.

If you enjoyed this episode, be sure to join our community! You’ll never miss special announcements and offers, plus you’ll get future podcasts and blog posts delivered straight to your inbox so you can get in on the action right away.

Most Recent Episodes

Financial Hacks and Habits of the Top 1% (By Age)

ho wouldn’t want to have a high enough income and net worth to be considered part of the top 1%? In this episode, we’ll tell you exactly how much you need to be considered part of the top 1% - and the habits and hacks those in the top 1% used to get there.   In this...

How to Win With Money in 2023!

Financial resolutions are always near the top of the list of Americans’ most popular New Year’s resolutions. Whether you want to save and invest more, pay off debt, or have other financial goals, we will give you the tools you need to win with money in 2023.   In this...

TikToks That INFURIATE Financial Advisors

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

5 Levels of Wealth AND How to Achieve Them! (2023 Edition)

We believe there are five distinct levels of wealth, but they aren’t solely dependent on income or net worth. We’ll walk you through each of the five levels - including how to know where you are at, how to advance to the next level, and signs you are doing it right.  ...

Average Net Worth By Age in 2023!

It’s time for one of our most anticipated shows of the year: our annual Net Worth By Age show! In this year’s edition, we’ll shared updated numbers and data for 2023 and discuss the most important things for you to focus on in each decade.   In this episode, you'll...

Win Financially During a Recession! (Everything You Need to Know)

The bear market we've experienced in 2022 has been longer than many in recent memory - and some are concerned that the economy may soon enter into a recession. Here's everything you need to know to stay on-track and win financially during a recession!   In this...

The Fed Just BROKE the Car Market! (What You Need to Know)

Car prices have been on a rollercoaster ride the last few years, and it looks like they might finally be coming down. In this episode, we’ll discuss what you need to know about the current car market, pitfalls of buying a car, and how to do it the right way.   In this...

Top 4 Money Mistakes People Make During the Holidays!

There’s a reason why financial resolutions are always near the top of the list in January - many Americans spend the holiday season making financial mistakes. In this episode, we’ll discuss the top money mistakes people make during the holidays and how to avoid them....

Financial Advisors Share What They WISH They Knew About Money Earlier!

Have you ever felt like if you just knew this one thing about money earlier your finances would be in a better spot? In this episode, we’ll share the five biggest things we wish we knew about money earlier!   In this episode, you'll learn: What we wish we knew earlier...