10 Personal Finance Questions You Should Ask Yourself
iconicbestiary

10 Personal Finance Questions You Should Ask Yourself

There are personal finance questions you need to ask yourself if you want to take control of your life and achieve financial freedom.

Financial freedom is based on principles that help you gain control over your money, and one of such principles is personal finance.

Personal finance encompasses all financial operations in an individual’s life, from resource management to financial decision-making.

In 2020, Experian reported that consumer debt in the United States is upshot by $800 billion, a six percent increase over 2019.

Arguably, the number might have heightened due to the pandemic’s effects. But it could have cushioned if most consumers have and apply personal finance knowledge.

Personal finance itself is training because it requires self-evaluation and discipline.

The majority feel that a higher income will reduce debts and increase wealth.

But studies have shown that high-income earners plunge themselves into unmanageable debts.

A survey of bachelor degree holders’ credit cards in the US averaged $8,200 in debt with a $64,896 total because they earn higher.

Master degree holders owe $77,894, and doctorate degree holders owe $97,916.

However, their less-educated counterparts owe lesser.

Those without a high school diploma owe $30,764; $38,792 for those with a high school diploma; and a total of $92,000 for those with a two-year college degree/those who attended some college.

These statistics point towards the importance of financial self-evaluation concerning an individual’s net income, bill management, expenditures, savings, financial goals, and so on.

Financial decisions are best taken after critical scrutiny and thorough research.

Viewpoint, though, and insight-provoking questions are suitable methods to prompt a more critical view of a situation to take a more beneficial decision.

There are several questions that an individual can ask before taking a financial step.

However, we’ll highlight ten model purpose-driven questions in this article and why we should consider these questions.

Related: 10 Vital Reasons Why Personal Finance is Important

Personal Finance Questions You Ask Yourself & Answer

1. What can I realistically do to improve my income level?

Personal finance helps an individual to see money in a broader perspective, rather than just as a means to cover one’s current expenditures.

There are various ways to improve one’s income. 

Still, an individual must analytically consider the best options to improve their income level, the target period (short or long term), tax implications, reasons, and importance.

Carefully considering this question will assist an individual in making the best decision concerning a new or extra source of income.

2. What would happen to me if I were to lose my job and not get employed on time?

According to the US Bureau of Labor Statistics, the economic outcome of the Covid-19 pandemic caused the United States’ unemployment rate to increase by 4.4% over the previous month in April 2020.

This sad toll resulted from a sudden event that rammed globally, taking several individuals off guard. 

Most of those affected had no prior notice, nor were they hopeful of their situation’s improvement in the near future.

This could be the case with anybody in the labor market.

Therefore, concrete strategies should be made for such emergencies beforehand.

Expectation and preparation for unemployment emergencies will help individuals plan an organized financial scheme while they’re still employed. This may include personal savings for unemployment insurance. 

3. What was the last money mistake I made, and why did I make it?

Many people lack the ability to put their gross habits right with their net income.

Also, they continue to make financial mistakes because of improper planning, insufficient corrective measures, or bad financial decisions and actions.

People may also make financial mistakes due to unstable emotions, trends, general opinions, geographical locations, and underlying social/financial conditions.

However, scrutinizing former mistakes and the reason(s) behind them is a good way to avoid costlier financial errors in the future.

Related: 20 Personal Finance Tips For Financial Success

4. What big expenses could come next year (insurance payment or property taxes)?

Two things are inevitable in life, and tax is the second.

Therefore, tax is an essential element of economics and must be planned along with property purchases. 

Bill management is one of the importance of personal finance.

Proper planning must be done to approach bill payments when they arrive in the form of insurance payments or property taxes.

Taxes and insurance are usually scheduled annually.

Therefore, the best way to manage is to schedule savings ahead of time.

5. What significant expenses could come in the next five to 10 years (down payment for a property or a new car)?

Unlike the previous question, this one has to do with long-term projects like purchasing a new property within an approximate date.

Personal finance practitioners are encouraged to factor in their long-term expenses along with the taxes they’ll incur. 

6. Do I have a sufficient emergency fund?

What happens in case of unexpected events like illness or accidents?

One seeking financial stability should prioritize having a sufficient emergency fund.

That way, emergencies could be ably dealt with without sustaining insurmountable debts and interfering in preplanned financial goals.

Related: 50 Personal Finance Vocabulary You Should Know

7. Am I on a realistic savings pace for what I want to do when I’m near retirement age?

Retirement seems to be a long time for young entrants in the labor market, but personal finance helps to plan for the retirement age.

While preparing for retirement, it’s advisable to factor in economic norms like inflation and Return on Investment (ROI).

Personal decisions concerning what to do as the retirement age approaches and retirement location are other realistic decisions that you should also consider.

This question should prompt those who have not started planning for their retirement or haven’t felt the facts highlighted while planning.

Related: How To Retire Early In 15 Practical & Easy Ways

8. What would happen to me if my spouse passed away suddenly or becomes unable to cater for themselves?

Demographics in 2020 show that 70.9 economically dependent people in the United States depend on 100 people of the working-age, against is 70.1 to 100 people over the previous year.

The increase over the last year implies a more significant burden on the working class in 2020.

What would happen if the mortality rate on the working-age increases?

The economy would be affected, but from the simplest unit of the society—the family.

Personal finance knowledge will help an individual plan for their survival in case of their breadwinner’s demise.

9. Do I have a will, estate plan, life insurance, and an information document in place for my dependents or others I care about?

Single people might not need to worry about wills, estate plans, and life insurances.

Still, those with spouses, children, and other dependents need to plan for terminal illnesses and unfortunate incidences that can cause disability and death.

Related: 17 Famous Motivational Life Insurance Quotes & Sayings

10. What can I do to help my children with schooling in the way I’d like to?

Developed countries like the United States have governmental support for educational expenses, especially in elementary and high schools.

However, parents can apply their personal finance knowledge by deciding how they’ll assist their children in funding their college education and how much they’re willing to spend.

Determining this will prompt them to start a saving scheme for their children’s education.

Wrap Up

Asking personal finance questions is an important and essential step to financial stability.

They provide insights into an individual’s income, bill management, expenditures, savings, and financial goals.

We hope that these ten personal finance questions sampled in this article can lead you to a well-structured financial lifestyle.

You’ll Also Enjoy:

Leave a Reply