If you’re going to take a look at your finances, what timeframe do you use? For most of us it’s this week, this month or some other short period of time that revolves around our paychecks or bills.
Time can help you gain a different perspective by widening our viewpoint. Plus, there are bigger picture things we can learn just from looking at our finances over time.
Where you are today in your finances is a product of what you have done in the past. Not only have you set yourself up in your current situation, you probably have some obligations from the past that to a certain extent determine what it is you’ll be doing in the present and into the future.
For the most part, that’s debt. Your debt affects your present and future because it’s money that has to be paid. That’s one reason why taking on debt frivolously can lead to negative consequences into the future. If you have managed to decrease your debt and have been saving for the future, then your past can look like you’re on the right path. A good path sets you up for a solid future.
Questions to Ask:
- What debt am I paying off?
- What did I spend that money on and was it worth it?
- What good decisions did I make?
This is where most of us feel comfortable thinking about our finances. Sometimes it can be just figuring out how to get from one day to the next or one week to the next. Taking money that you have and putting it to use is what happens in the present. Spending too much time focused on making it from paycheck to paycheck can hurt your finances because you won’t be prepared for what will come after that next paycheck or what emergencies might happen before you’re paid again.
In the present it helps to focus on the future. First of all, beware of debt that ties your hands in the future. Second, make it as easy as possible on your future self. If you don’t need the money in the present, save it for the future. This also includes willingly living off less now and saving money consistently and purposefully before you start spending it on bills and other things.
Third, prioritize your budget so that it helps to accomplish larger goals in the future. If you’re only ever focused on the present, the larger things in life won’t ever be just around the corner unless you’re making sure you’re headed towards them. Set up your budget so you’re working toward bigger goals, not just making it to the next week or month.
Questions to Ask:
- What changes can I make to improve next week or next month?
- How can I help accomplish my long-term goals now?
- What is it I would like to have so I can plan for it?
Spending time focused on your future can be a good exercise for a variety of reasons. It allows you to make present tradeoffs for better future decisions. Short-term enjoyment can remove long-term options, but refraining from making bad decisions in the present can help set you up for future success. By focusing on the future, you can make sure you’re making the best decision, whether it’s doing more now or later.
Focusing on the future helps to remove the immediacy we can feel when it comes to impulses or other tempting offers that don’t necessarily align with our long-term plans. In one sense, waiting just a few more minutes can help make a good financial decision easier because you have more time to think about what that decision would actually mean for your finances.
Questions to Ask:
- What are my most important goals?
- How should I prioritize my financial decisions to make those goals a reality?
- Am I saving money so I’m prepared in the future?
Take advantage of the bigger view of your finances with Mvelopes. Plan for your future with an envelope budget and categories that can help to organize every penny of today’s and tomorrow’s money. Make your finances simpler with Mvelopes.