You can re-wire your brain and the way you think about money by learning to ask questions that nudge you toward positive action steps. Here are ten such questions. I’d love to hear people asking these more often.
1. What actions did I take this week to increase what I save? Maybe you skipped that expensive coffee and added $5 to your emergency fund jar at home. Maybe you decided to look for that new coat at Goodwill.
Or maybe you increased what you contribute to your company retirement plan by 1 percent. If you took an action a week that increased your savings, you’d be amazed at where you’d be in a year.
2. Am I maximizing the interest rates available to me? Instead of worrying about low interest rates, do the best with what is available. Are you keeping money in an account that pays nothing when it could be earning something? Take steps to get the most out of what you have and when higher interest rates come along you’ll be ready.
3. What career choices can I make so I have skills that are in high demand even in a bad economy? Investing in your career is a smart move. Keep your skills currentand continue learning new ones, and you’ll be more likely to weather a downturn with minimal loss of income.
4. How can I invest in a way that gives me the highest probability of achieving good returns over time? Investing for growth is not about finding the best stock.
It’s about building a diversified portfolio that should weather the ups and downs and deliver decent returns without putting your life savings at risk. Learn how to follow an asset allocation plan and you’ll be headed in the right direction.
5. What is the best way to invest so I do ok no matter who is elected? Keeping your eye on long term goals is key to investing success.
6. What risks will I incur if I buy higher yielding investments? If something is paying super-sized yields treat it like a giant “proceed with caution” sign. Ask what conditions might turn this seemingly good investment into a bad one. If you understand the risks, then proceed with only a small part of your portfolio — not the whole thing.
7. Am I more concerned about temporary losses (volatility) or a permanent change of lifestyle (being forced to live on less)? Study past bear markets and you’ll see that market downturns — even those that last several years — are temporary events when viewed over a decade or two. Focus on your life-time goals and don’t let any temporary drama distract you.
8. When would be the best age for me to access my (Social Security/Pension)…. So that my life long retirement income is as secure as possible? The trade-off for early access to many income sources is less security in retirement. Is that really what you want? Re-frame the way you think about these things so you can bring more financial security to your retirement years.
9. What is the best way for me to track my progress toward my financial goals? Figure a way to track how much you save each year and what your net worth is. Tracking financial accounts, savings goals and progress toward paying off debt keeps you focused on the positive direction you are headed – and helps you quickly become aware of times where things are stagnating. If you really want to beef up your financial success you’ll find a way to track key metrics.
10. How can I make sure a sharp downturn in the stock market does not affect my planned retirement date? Market downturns are inevitable.
If all your money is in the market the year you plan to retire, the downturn can be devastating. Don’t let that happen! Make sure the money you have in the market is not money you’ll need to live on in the next ten years. With a well-structured retirement income plan, a market downturn should not force you to change your retirement date.