Five 'whys' can shine a light on your problems

Liam Croke


Liam Croke

Five 'whys' can shine a light on your problems

Saikichi Toyoda, the king of Japanese inventors, developed the 'five whys' concept to find and solve problems

IT can be hard to think about setting financial goals when your account balance is reducing at an alarming rate, the credit card statement arrives, your Christmas spending sinks in, and you are still weeks away from getting paid.

But now is the time to start thinking about what you would like to achieve in the year ahead. January is all about fresh starts, so it’s a great time to kickstart your finances and make some commitments about what you are going to do to improve your financial situation.

But before you start writing down what your financial goals for the year ahead are, you first need to reflect on how you did last year.

So, 2017 requires a bit of a post-mortem before you start making plans for 2018.

It’s good to ask yourself what progress did you make last year? How much debt did you pay off? How much more did you save? How did your pension fund perform? How did you manage your finances each month?

The point of doing this, and you have to be honest with yourself when answering the questions, is to know what you did well and what didn’t go so well. You have to learn from the past, so you can make improvements going forward. There is no point in setting yourself a goal where you will save €5,000 this year when you saved nothing last year.

Why did you save nothing last year? What makes you think this year will be different?

Take a few minutes out to think about what happened in 2017. If you want to set yourself up for success in 2018, it begins with finding out the reasons why you didn’t achieve your goals last year. Before you begin thinking about new goals, here’s a really good tip that might help uncover the real reason why you didn’t meet last year’s ones: it’s simply asking why to the answer of a question asked five times.

This is a technique originally developed by Sakichi Toyoda of the Toyota Motor Corporation who used it in order to help diagnose the root cause of engineering problems.

Below is an example of how this works:

Q1: Why didn’t you save money last year?

A: There was never any money left in my account at the end of the month (first why)

Q2 – Why?

A: Probably because I don’t track where I spend my money each month (second why)

Q3 – Why?

A: I don’t see a need to, and anyway I like to buy nice things for myself (Third why)

Q4 – Why?

A4: Because when I was younger, my parents couldn’t afford to buy me new clothes, so I used to wear secondhand clothes and I hated that (Fourth why)

Q5 – Why?

A5: Because the children at school and where I lived used to make fun of me

The above is a real example of someone I used this technique with to see why they couldn’t save each month.

They viewed clothes as a status symbol and a way of being accepted by their peers. Once they recognised this, and understood the underlying root of their problem, they made a breakthrough and began to save each month rather than continuously buying clothes.

So, when you look back at why you didn’t achieve some of your goals last year, ask yourself ‘why’ to each of the answers you give. It may not even take five ‘whys’ to arrive at the root cause, but once you figure out what the core reason was, you can then make adjustments and begin to move forward.

You could use this exercise for all areas of your New Year resolutions and it might help uncover the real reason why you didn’t lose weight, or exercise, or change careers or whatever it was you failed to achieve last year.

After you complete this exercise, you then need to look at your financial goals for this year. I recommend you write down, in no particular order, five areas you would like to improve on in the year ahead.

When you’ve done that, I would rearrange them in order of importance, with number one being the area that you would like to deal with first and is your top priority.

Once you have set those goals, I find one of the key things that will help achieve them is to make them quantifiable and break them into smaller chunks. For example, if your goal is to save €10,000 in 2018 which will go towards a deposit for a car or a house, that’s one big goal and might seem overwhelming to some. They will question how they will even begin to achieve it.

But if they break that number down and have 12 goals where their aim is to save €833 per month, it seems a lot easier and achievable.

Doing it this way, can be a great way to stay motivated where you are able to see real progress towards that one bigger goal you are striving towards. And you also have to ask yourself, is this really possible?

Don’t set yourself up for failure from the outset by setting goals that aren't achievable within the time period you set. Look at your income and outgoings and if you genuinely think you can save €833 every month go for it. But if that means you are going to have to live on beans for the next 12 months, then maybe don't set yourself that target date, because you will get fed up in month two and just give up.

So, don’t be afraid to extending your goal achievement date either.

Liam Croke is MD of Harmonics Financial Ltd,

based in Plassey. He can be contacted at or