When it comes to personal finance, the one question that can save you a lot of money, time, and heartache is, “Why?” Too often, though, it’s the question people don’t ask. I learned a long time ago to ask why (about pretty much everything, not just money). I was one of those kids who pestered my parents by asking why all the time and, when they’d give me an answer, I’d say, “But why?” in a never ending circle of questions. It’s something I still do today, although perhaps with less of a pestering quality.
The first person you should always ask “Why?” of is yourself. You should always question your motives, needs, and wants when dealing with money. You also want to ask professionals why they are recommending certain things to you or steering you toward certain products. Here are some examples of “Why” based questions that can help you.
“Why do I need this product?”
“Why should I choose this investment over another?”
“Why is this product better than the alternatives?”
“Why does the doctor want me to take this drug over another, or at all?”
“Why is this financial advisor steering me toward this investment/product over others?”
“Why is this job better/worse than others?”
“Why do I want this product?”
“Why do I need this degree?”
“Why should I buy a house instead of renting?” (or vice versa)
“Why is this person offering me advice?”
Asking why helps you to know yourself and uncover biases or potential scams. If you can stand in a store and ask, “Why do I need this?” and then come up with a solid reason, you’re better off than just buying it for no reason. Similarly, if you can’t come up with a reason and you leave it on the shelf, the question has saved you money. When dealing with professionals, asking why can help you avoid costly mistakes. If you ask your advisor why you should invest in Investment X and he can’t come up with a solid reason (that applies to you personally), you know to run away. If you ask a doctor why you should take a certain drug and the answer is some variant of, “Because I’m in bed with the pharmaceutical company,” you may avoid taking a costly and unnecessary medication.
Keep asking why until you’re satisfied that you have the information you need to make a good decision. Anyone who won’t take the time to answer your questions to your satisfaction should send up a red flag. Asking why can be a useful way to trigger your instincts. If you ask why and the answer leaves you unsure or uncomfortable, walk away. You may be dealing with a scammer or someone who is just unethical or stupid.
Never be afraid to ask questions, particularly of those giving you advice. It’s true that the only dumb question is the one you don’t ask, especially because not asking could cost you thousands if you get into something you don’t understand or get sucked into a scam. Always ask why you need this product or investment and why it’s suitable for you (as opposed to everyone else). Asking “Why?” now could save you from asking, “What the hell happened?” later.
(Photo courtesy of Veronique Debord)