It’s a profound question. From toddlers to elders, we ask “Why?” throughout our life. This small word is the portal to our understanding of the world around us. It inspires us to search, to dig, to break barriers, to relate and understand one another. It inspires us to understand ourselves and the people we care most about.
The concept of asking “why?” when it comes to one’s finances might, at first, seem a bit odd. Even at the thought of it, you might instead be asking yourself, “Why would I ask ‘why’ about my finances?”
After all…
Isn’t money straightforward?
Isn’t personal finance easy?
Don’t you just save more and spend less? Avoid going into debt? Maintain a budget?
The answer to the first two questions: Nope.
The answer to the next three: Maybe.
This is where we get back to our original concept…
What is your ‘why’ in your financial life?
Why would you save more and spend less? Is it to put the kids through college? Move to France when you retire? Take care of your parents in their old age?
Why would you avoid going into debt? Because your parents told you to? Because all debt is bad debt? What if you know that taking out a student loan and finishing your degree is better in the long run than sticking it out in a career that won’t get you to where you really want to be - does it make sense to avoid going into debt under those circumstances?
Why would you maintain a budget? Is that easy? Have you tried it? For how long? And, more importantly, to what end? Why (there’s that question again) does it matter if you understand the daily ins-and- outs of where your dollars are going?
This small, simple question...Why? It permeates our lives, and yet, for most, we truncate our financial lives in simple terms - mutual funds, stocks, markets. Wrap those up in some compounding interest and you’re good to go. Right?
Try giving that line to the young woman whose mom was just diagnosed with terminal cancer and her family doesn’t know how they’ll pay for it. Does a strong bull market help them solve that problem? Or the person who just came into an unexpected inheritance and wants to make it last. Does a mutual fund provide the answer?
Money, in our modern lives, is a force that we rely on for our survival. Its significance in our lives is as deep as love from our family and acceptance from our peers. Without these, we feel threatened and we behave irrationally. And yet, when it comes to love and acceptance, we often ask why.
So, the next time you look at your quarterly statement, give it a try – ask yourself the following four questions:
  1. Why is the money here?
  2. What purpose does it serve?
  3. How long should it be there?
  4. When do I need it?
And with the answers, we’re ready to begin truly creating the landscape of your financial life.

Investing in mutual funds involves risk, including possible loss of principal.


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