5 Questions to Help You Get Rich
Laura covers five strategic questions that you must answer in order to get a grasp on your current situation and take your personal finances to the next level. How you answer the questions will identify what’s missing in your financial life, where you want to go, and who you need to leverage for help.
Laura Adams, MBA
Listen
5 Questions to Help You Get Rich
Becoming rich doesn’t happen overnight. Unless you win the lottery or have a huge inheritance coming, building wealth happens gradually over time.
Financially successful people always have a plan for building and maintaining their wealth.
No matter if your personal finances and career is a wreck right now, or you’re flying high, it’s important to be very clear about the direction you want to go.
In this article I’ll cover five strategic questions that you must answer in order to get a grasp on your situation and take your personal finances to the next level. How you answer these questions will identify what’s missing in your financial life, where you want to go, and who you need to leverage for help.
Free Resource: Laura’s Recommended Tools—use them to earn more, save more, and accomplish more with your money!
Question #1: Do I have a positive money mindset?
Your money mindset is how you think about money and relate to it. Our mindset is key because it’s the precursor to our behavior. None of your actions or behaviors happen in a vacuum—they always spring from your thoughts or mindset.
I want you to be real with yourself. Own up to whether your thoughts about money support you and move you in a positive direction every day, or are holding you back and sabotaging your ability to get ahead.
If you think that you’re at a disadvantage because you started learning about money late in life, didn’t go to college, or don’t have the career you really want, it’s time to leave those negative, false beliefs in the dust.
It doesn’t matter if you’re working an entry level job or are a highly-paid CEO, your money mindset is the key to whether you build lasting wealth or not. Your ability to grow rich doesn’t depend on your education or earning power.
Smart, powerful people can fail miserably with their money when they don’t follow the basics like living below your means, having enough of the right kinds of insurance, and investing for the future.
You’ve heard about rap stars and fashion models who end up bankrupt even though they made millions every year. The reality is that anyone can wind up poor no matter how much flows in and out of their bank account.
The reality is that anyone can wind up poor no matter how much flows in and out of their bank account.
Likewise, anyone can end up wealthy if they have the right mindset and consistently save and invest small amounts of money. Having a healthy money mindset means that you have clarity about what you’re supposed to be doing with your money, and you actually do it!
See also: Are You Making Investing Too Complicated?
Question #2: Do I have the right financial focus?
The second question to ask yourself is whether you have the right financial focus. In other words, do you know your priorities or values and manage money in alignment with them?
Values are standards of behavior or principles that you believe in deeply—like being independent, having close relationships, pursing optimal health, or giving your kids a financial head start in life. One way to test whether your finances fit with your personal values is to look at your checkbook or budget, if you have one. How you spend money speaks for itself because it clearly shows what you really value.
The benefit of staying focused on values is that they give you deep inspiration and motivation to make new and perhaps difficult choices, like boosting contributions to your retirement account, building an emergency fund, or sticking to a spending plan.
In order to know what you’re supposed to be doing with your money, you have to get clear about what the end goal is. Everyone’s ideal financial future is different. You may want to live simply for decades and retire early. Or you might dream of buying a big house, starting a business, or moving to a big city.
Once you’re clear about your values, you should create specific goals. For example, if you value education, you might create a goal to save $30,000 for your child’s college education. Then calculate how much you need to invest over what period of time to achieve it.
See also: 6 Essential Habits of Financially Healthy People
Question #3: Do I use the best financial tools?
Taking advantage of the right financial tools and products—like retirement accounts, insurance, health savings accounts, and credit cards—gives you a big leg up on becoming rich. There’s a wide range of options and often we get lazy about doing research and shopping around for the best deals.
If you carry a credit card balance from month to month, do a search on Creditcards.com for low-interest cards that would cut your monthly rates. If you want to pay off credit card balances for good, wipe them out with a less expensive, low-rate personal loan. Shop sites like Prosper, Lending Club, SoFi, and PayOff for the best rates and terms.
Own a home with a mortgage? Contact different lenders, such as Quicken Loans or USAA, to discuss whether refinancing makes sense. In many cases, refinancing is the easiest way to get out of debt much faster.
If you still have a 401k with an old employer, do a tax-free rollover into an IRA at sites like Betterment, FutureAdvisor, or Scottrade for more control over your money. Remember that cashing it out is a bad idea because you’ll be on the hook for income tax and a 10% early withdrawal penalty if you’re younger than age 59½.
And don’t forget to have an annual meeting with your insurance agent to discuss money-saving options that will still give you plenty of protection. You can also shop policy rates at sites like insuranceQuotes and USAA.
See also: 401k or IRA: Which One Should You Invest in First?
Question #4: Do I stick to a smart plan?
If you’re living paycheck to paycheck, that’s a sure sign that you need to create and stick to a spending plan.
The fourth important question to ponder is whether you’re taking the right actions and following a plan for your money. If you’re living paycheck to paycheck, that’s a sure sign that you need to create and stick to a spending plan.
If you’re not investing for retirement, I can’t stress enough how important it is to participate in your workplace retirement plan. Not only to you save for the future, but you get some terrific tax breaks and perhaps free matching funds from your employer. When you have a job that doesn’t offer a retirement plan or you’re self-employed, open up an IRA and set up automatic monthly contributions.
There are other actions you need to take on a weekly, monthly, or yearly basis, like paying bills on time, reconciling account statements, reviewing your bank and credit card transactions, monitoring your net worth, and checking your credit report. I give you a list of the most important money management tasks and when to accomplish them, in chapter 4 of my book Money Girl’s Smart Moves to Grow Rich.
See also: Investing Tips for College Students and Baby Boomers (Plus Everyone in Between)
Question #5 Do I leverage the right professionals?
The last question you should ask yourself is whether you’re using the right financial professionals. There are a host of pros—such as financial planners, tax accountants, and attorneys—who help people everyday with issues that you might be struggling with right now.
If you need help with the big picture of your finances, like setting goals, knowing what your priorities should be, navigating through a complex situation, or just need to stay accountable to someone, make an appointment to work with a financial planner.
For instance, if you want to get all the tax benefits you’re entitled to, hire a tax accountant. If you don’t have an insurance agent who’s willing to answer your questions, find a better one. Take advantage of advisors to pick investments—many workplace retirement plans and IRAs offer them for free.
Working with the right experts can help you make huge leaps forward with your money as quickly as possible. If you’re not sure how to find them, use a site like Wealthminder that matches you with different types of advisors that fit your needs.
See also: Should You Pay Down Debt or Invest?
How to Improve Your Personal Finances
How you answer these 5 questions about mindset, focus, tools, actions, and professionals, should help you identify how to fill voids in your financial life and take your money management to the next level.
If you feel overwhelmed, just start with the area of your finances that concerns you the most. For instance, if you’re worried about losing your job because you don’t have a financial cushion to fall back on, build an emergency fund as quickly as possible.
Becoming rich is the result of having clear goals, making financial sacrifices when needed, and continually tracking your progress to stay on course. Wealthy people don’t get bogged down with mistakes they made in the past; they stay focused on the future.
Get More Money Girl!
Want to know the best financial and productivity tools that I use and recommend to save time and money? Click here to check out 35+ tools I recommend!
To connect on social media, you’ll find Money Girl on Facebook, Twitter, and Google+. Also, if you’re not already subscribed to the Money Girl podcast on iTunes or on the Stitcher app, both are free and make sure that you’ll get each new weekly episode as soon as it’s published on the web. We’re also on the Spotify mobile app!
Click here to subscribe to the weekly Money Girl audio podcast—it’s FREE!
There’s a huge archive of past articles and podcasts if you type in what you want to learn about in the search bar at the top of the page. Here are all the many places you can connect with me, learn more about personal finance, and ask your money question:
- Google+
- Money Girl podcast on iTunes (it’s free to subscribe!)
- Money Girl on the FREE Stitcher app
- Email: money@quickanddirtytips.comcreate new email“>money@quickanddirtytips.comcreate new email
- Click here to sign up for the free Money Girl Newsletter!
Download FREE chapters of Money Girl’s Smart Moves to Grow Rich
To learn about how to get out of debt, save money, and build wealth, get a copy of my award-winning book Money Girl’s Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don’t. It’s available at your favorite bookstore as a paperback or e-book. Click here to download 2 FREE book chapters now!
Gold Coin Step Stair image courtesy of Shutterstock.
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.