Questions to ask before you begin any financial activity

Before starting any significant financial activity, taking time to ask the right questions can save you from costly mistakes and help ensure you're making decisions aligned with your goals. Here's a framework of questions to consider.

First, ask yourself: What am I trying to accomplish? This sounds obvious, but many financial decisions are made without a clear goal. 'I want to invest' is vague. 'I want to build an emergency fund of three months' expenses over the next year' is specific and actionable.

What are the risks involved? Every financial activity carries some level of risk. Understanding what could go wrong—and how badly—is essential for making informed decisions. Don't just consider the upside; think carefully about potential downsides.

What don't I understand? Identify the gaps in your knowledge. What aspects of this activity are unclear? What terms or concepts do you need to research? Recognizing what you don't know is the first step toward learning it.

Who can help me? Consider whether you need professional guidance. Some financial activities are straightforward enough to handle independently; others benefit from expert input. Know the difference, and don't hesitate to seek help when appropriate.

What's my timeline? Financial activities often have time dimensions. Some decisions need to be made quickly; others benefit from deliberation. Understand the timeline you're working with and whether there are any deadlines or time-sensitive factors.

What are the costs? Beyond the obvious financial costs, consider time costs, opportunity costs, and emotional costs. The cheapest option financially might be the most expensive in terms of time or stress.