Financial planning isn’t just about spending less than you earn and contributing the max in your 401K. If that was all there is, you wouldn’t be reading this right now. Your financial problems would be solved, and my writing would serve no purpose.
Lucky for me, this isn’t the case. There is a lot more to financial planning than just doing what the numbers and statistics tell you to do next. One of them most overlooked topics to financial planning, is problem solving. More specifically, finding the causes of your problems and deciding on a next action to take.
The purpose of this post is to introduce you, a very simple problem solving technique known as the 5 Whys.
The idea behind the Five Whys is to state a problem and ask yourself five times why you have this problem, always building off the last why. The goal is identify the root cause, instead of touching just the surface.
Example of the Five Whys
It’s best to see a few examples of the Five Whys in action.
Example # 1:
- State the Problem – I continue to build credit card debt
- Why? – Every month, I spend more than I earn (first why)
- Why? – I don’t keep track of monthly income and expenses (second why)
- Why? – I haven’t worked on developing the habit (third why)
- Why? – I haven’t made keeping track of money a priority (fourth why)
- Why? – I don’t have any financial goals (fifth why)
- Solution – Schedule one hour to set up an account with Mint to track my finances and set three financial goals.
Example # 2:
- State the Problem – I hate my job
- Why? – I don’t enjoy the work (first why)
- Why? – I don’t get to choose what I work on (second why)
- Why? – I haven’t gotten a promotion (third why)
- Why? – I haven’t created enough value for my employer (fourth why)
- Why? – I don’t have the skill sets that people above me have (fifth why)
- Solution – Interview people whose who work in my ideal job and ask what skills got them there.
Conclusion – Improving Problem Solving Skills
Yes, the 5 Whys approach is so simple that you might overlook it. However, the beauty behind its simplicity, is that it works on almost any problem.
Try it for yourself. Identify a problem and ask yourself why five times.
If you feel daring enough, share your results in the comments.
Photo by: Mad LOL Scientist