The goals that you want to achieve in life, which in turn drive your financial goals, are probably aligned with your values. For example, people who don’t value travel don’t have goals of traveling the world. People who value helping those who are less fortunate than them may have significant charitable contribution goals. However, sometimes what we say that we value, and in turn, what we say that our goals are is idealistic rather than realistic.
Are Your Values Really Your Own?
Sometimes what we actually spend our money on doesn’t align with what we say our goals and values are. It’s easy to fall into the trap of saying that something is a goal or value because that’s what’s popular, or because that’s what we like the idea of, or because we feel like that’s what we’re supposed to value. The issue is that’s not being true to yourself and won’t provide fulfillment.
I often find that what people say they value is not how they’re currently spending their money. Someone who says that they want to retire early but isn’t saving a significant percentage of their income for retirement has misaligned values and money. Someone who says that they want to travel the world but actually spends the majority of their money on a big house and brand new cars has misaligned values and money.
Where Is Your Money Going?
Reviewing your spending is the best way to see if your values and your money are truly aligned. I would recommend doing this monthly at a minimum. Tracking your spending is not budgeting. Budgeting is telling your money where to go so that it works for you the way that you want it to. Tracking your spending is seeing where your money has already gone.
Reviewing your spending can tell you a lot about what you really value. It can also tell if you’re directing your money towards what you really value. Look at your spending categories high level. How much do you spend on groceries, eating out, housing, transportation, entertainment, miscellaneous “stuff”, etc.?
What Changes Need to be Made?
Once you have a good idea of where your money is actually going, it’s time to do some serious reflection. Are you happy with where your money is going? Are there areas that you wish you could spend more? Where would you be willing to spend less so that you can spend more on those things that you truly value?
Sometimes the answer to those questions may not be easy. Hard decisions might need to be made, but it’s worth it if it leads to a more fulfilling and happier life.
Maybe you’ve followed the same path in life that your peers have because you thought that’s what you were “supposed” to do. Maybe that path has led you to a place that doesn’t align with your personal goals and values. Making big decisions like selling your house or car so that you can buy a less expensive one that will allow you to spend more on what you really value is not easy. But it may be what’s necessary to truly align your values and your money.
Find Your Own Values
You might not even be clear on what your values are yet. If that’s your situation, then I think that this article that I wrote titled 5 Questions to Help You Determine Your Financial Goals is a good place to start.
The value of the financial planning process isn’t the financial planning output (ie. a report, spreadsheet, or recommendation). The value of financial planning is the outcomes – how your life changes and what you achieve based on the output.
Aligning your values and your money will lead to more fulfilling financial planning outcomes. It definitely isn’t easy, especially in a world that encourages comparing yourself to others and keeping up with the Joneses. I encourage you to take some time to work through the exercises above. Review your spending, get clear on your values, and figure out what changes you can make to align your values and your money.
