Tuesday, August 7, 2018
Why is Money Important to You?
I have been raking over this question a lot lately. If you ask 10 people why money is important to them, you will probably get 10 different answers. There are always the people who think money isn’t important, but I won’t delve into that nonsense right now. For the rest of us, money is extremely important, but the question remains, why is it important to you? Many people will speak to their family, or their lifestyle or even their state of mind. I believe it is important to narrow down each of our answers to this question to find out how to go about one’s life. Today I am going to help you answer why money is important to you as it is crucial to successful financial planning. If you can answer this question correctly and thoroughly, all other money issues become less difficult. Let’s get started.
What is important to you?
If we think of money as a tool, then the first logical question that needs to be asked is “What is important to you?” Most will say, family or friends. Some say adventures or even their pet. Some say comfort and the ability to live without worry. While these are all noble answers, they don’t provide us with much clarification. Let’s take your family for instance. Almost everyone I meet believes that their family is the most important thing in their life. Their spouse, their children, their sibling and parents all mean the world to them. In order to understand why money is important to each of us individually, you MUST understand what in your life is the most important to you. The reason this is so crucially important is that you will never have direction in terms of money if you have no direction in terms of love. Take a moment and think about what and who are the most important things in your world. Let’s go a little further.
Why are they important to you?
This is where it gets a little tricky. Why are the things that are important to you, important to you? The answer may seem simple. These are my children and I love them, so, therefore, they are important to me. The question you then must ask yourself is: Would having more money enhance my ability to love my children? If love equals time spent then yes, it most certainly would. More money would allow you to take more time off to spend with your children. What about wanting a better life for your children? Would being financial secure provide a better life for your children? Most would say yes it would. Obviously, if you are free from the stresses of money turmoil would make your children’s life a little easier. What are the things that could cause you to be less financially secure?
So, when you look at these obstacles to being financially secure and providing the best possible life for the ones you love, the next question is fairly simple…
What are you willing to do provide for the things that are important to you?
This is the real soul-searching question. I can ask any parent I know, and they would say they are willing to die for their children. Is dying for them really helping them? Will you ever encounter a situation where it is either your life or theirs? I can safely say no you won’t. The question then becomes: How are you willing to live to provide for the things/people that you love? Are you willing to sacrifice anything to make a better life for your children? If traveling is important to you, are you willing to give up a year busting your butt to be able to spend a month in Bali? What if your parents are most important to you? Are you willing to give up 10% of your pay to save for the day that you might have to care for them when they are elderly? What if your wife is most important to you? Are you willing to spend $30 a month to know that if you were ever gone she would always be secure?
You see, the problem with these questions is that we have turned them into sayings and not actionable tasks. “I would do anything for my wife and kids,” is a saying. That is what my job is, turning my client’s ideas on love, life, and money into actionable tasks. It is not as complicated as it sounds. Participating life insurance, diversified mutual fund portfolios, prescribed annuities, disability protection with inflation indexing, what is going on here? These products are nothing but your ideas on love and life with actionable money tasks.
Let me illustrate this with how I answered these questions:
1) What is important to you?
My future is most important to me. Being free from the worry of injury or illness taking away my ability to work and provide for myself and the ones I love is most important to me.
2) Why is this important to you?
While stating my future is important to me may sound selfish, I believe it is not. I want to accumulate wealth, so I can help those around me that need it. I know I am of no use to them financially if I am not secure myself. I, therefore, must work my hardest and make smarter choices along the way so that I am able to one day be the person they can count on when needed. I understand that if financial issues dog my life, I cannot operate from a place of giving rather than survival.
3) Would having more money enhance my ability to care for the things that are important to me?
Yes, it most certainly would. If I knew I could meet my daily needs without worry for the rest of my life, I could then focus on a strategy to help those around me, including my family and friends. I, therefore, must find a way to accumulate wealth to be in this position.
4) What are you willing to do about it?
Just about anything. I will spend $80 a month on Life Insurance so that if I pre-decease my parents they will have some funds to cover them when they are elderly. I will work as much as possible because it means I can save more money to generate more money in the future. I will invest this money because it gives me a greater return and therefore more opportunity over time to do the things I wish to do. I will actively participate in retirement savings because I know when that box is checked off, I can then focus on giving to others. I will put away a little money every year to go on vacation because I know that it is necessary to relax and recover from a grueling work schedule. I will spend a little money every month on income protection because I do not wish to be a burden on the ones I love should I ever become too sick to work.
Notice how I said the word “I” many times throughout that paragraph. I will do this, or I will do that. I need to take actionable steps to get the things I want out of life for myself and those around me. The government doesn’t have to do shit and neither does my boss. My friends can’t help me, and neither can my family. So, let’s go back to the title of this blog post.
Why is money important to you?
The answer is so very simple that it is laughable, yet we often stumble on it. Money buys us the things we need to take care of the things we love.
I love my family: I get Life Insurance to know they are always alright, even if I am gone
I love my home: I get coverage so that my family and I can stay in it should I get injured or sick
I love my children: I open an RESP, so they can have a head start at life through education
I love my future: I open a TFSA and an RRSP, so I can live in comfort and choose my lifestyle while working and in retirement
I love myself and those around me and I will do whatever it takes to live how I want to live and provide for those that I love.
That’s why money is important. That’s it, that’s all. It’s not about being a celebrity or taking over the world like many would have you believe. It’s about everyday people doing everyday things for the ones they love, including themselves. If you can successfully answer this question, you will win at life. The fact that you were able to wake up this morning and read this post means you are on the right track.
I will end this post with one last question:
“Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor. It’s about stewardship and, therefore, about achieving the good society.” – Robert J. Shiller
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