One of the most important factors in personal finance success is prioritizing your spending in a way that is commensurate with your values.
But what if you’re not sure what your values are?
What are values?
Values are those building-blocks that make each of us who we are. They are the things that you use to make decisions whether you’re aware of them or not. It’s important to call out that values are separate from morals. While culture and society may shape your morals, you, and you alone, define your values.
How to Gain Clarity and Define Your Values
By working to discover and name your values, you begin to build out explicit and strict criteria that can be used to make decisions in all areas of your life.
My favorite value exploration exercise goes as follows:
- Grab some paper and something to write with
- Down the left side of the paper write down careers or jobs that you think you would enjoy
- Example: Historian, Author, Park Ranger
- On the right hand side write down 3-5 things about that job that speaks to you
- Historian: Research, History, Lifelong Learnings
- Author: Storytelling, Creativity, Set My Own Schedule
- Park Ranger: Outdoors, Preservation, Exploration
- Repeat steps 2 & 3 for a few other categories:
- Events & Entertainment (concerts, sporting events, movies, etc)
- Hobbies & Activities (hiking, running, knitting, etc)
- Role Models & Mentors
- Family & Community (attending church, volunteering, family dinners, etc)
- As a final exercise to further identity values you may not be immediately aware of, repeat steps 2 & 3
- This time, however, down the left you’re going to write down things that bother you, annoyances or things that make you upset
- On the right side, now take some time to reflect and recognize what it is about these annoyances that bothers you
- Example: people being late may bump up against having your time respected. People who interrupt may upset you because it feels like you’re not being heard.
- Take all of the items in the right column and sort them into groupings of like words
- All you have to do now, is name them
Making Your Values Yours
Words have power. And one of the ways you can truly come to embrace your values is to name them in a way that is truly you.
Let’s say you’ve identified that you value ‘time outdoors.’ Find a way to name it that resonates with you, maybe something straightforward like ‘Green Thumb’ or something a little more colorful like ‘Trailwalker.’ Both have a different feeling even though they reflect the same core value. Go with your gut and don’t judge what bubbles to the top as you think about your value groupings. Spend some time with your list of values and give them a clear and unique name.
I call my personal values ‘My Big 6’. They are:
- Woman About Town: Spending time with my family and friends and experiencing new things with them
- Back to Nature: Find ways to spend time outdoors and to realign with nature through food (eating seasonally, making whole and local food choices when available, and gardening)
- Playtime: Making space and time to play and create in order to spark new ideas and reconnect with my inner child
- Land of Nod: Getting my full 8-10 hours of good sleep each night helps me perform at my best
- Kindness: I will exercise kindness in as many ways as I can, including my actions and my purchases.
- Freedom: I choose and determine how my time and money should be spent. No one is obligated to my time, attention or money.
And while I have several other values, including a set of values for my career, these are the core group that I find myself looking back to when I need to make a conscious decision.
All of this may seem unnecessary, but understand that once you take the time to get really clear about what you value, you’ll find a path to contentedness laid before you. When you live a life commensurate with your values, you live a life that’s fulfilled.
Values as Criteria for Decision Making
When you’re looking to lead a value-based life, understanding and being clear about what things you value can play an important role in identifying the ‘vital few’ activities and needs, or what I like to think of as ‘enough,’ for your life.
My values shape decisions I make, whether I want them to or not. They also inform my satisfaction with my decision.
Let’s say I’m invited out to a new jazz club, but the event doesn’t start until 10 p.m. and it’s a work night. I go to the office around 7:30 a.m., so going out to this club would leave me well under my sleep quota I try to get each night. More often than not, I’m going to say ‘No’ to going out. And it’s not because I’m a fun hater – it simply bumps up against a value of mine.
Or, let’s look at a few hours spent at a ballpark with colleagues or a few hours spent at a new ping-pong club with a single close friend. Because I value a) new experiences with people I care about and b) play, it’s always going to be the ping pong club for me.
Another example, this time with money. I’m given the option of either purchasing my friend’s local veggie co-op produce or passing on it. The cost is about $60 over what I had budgeted for groceries. Now we’re entering more complex territory because I value great, local food so this should be a no-brainer – and while the opportunity sounds great, ultimately my ‘Freedom’ is going to win over. I choose how my money will be spent through budgeting and I know I can get local, fresh veggies (that will be used up with no waste) from my grocer. So, I pass.
The great thing about understanding the role values play in your life, is it opens you up to understanding others’ action in a whole new light.
Maybe Barbara didn’t bail on after work drinks because she doesn’t like you – maybe she just values dinner time with her children.
Or Frank choosing to stay home and read instead of day-tripping to the lake with you – maybe he preferred to spend his weekend time reflecting and reading as he values introspection.
How Values Play a Role in Personal Finance
I’ve touched a little bit on how values can and do inform decisions you make on a daily basis. But they can also play an important role in your finances. Using your values to prioritize your spending can help you live within your means and use your funds in a way that helps you achieve satisfaction.
If you want to achieve early retirement, for instance, focusing what income you have on paying down debts and finding investments that can help achieve that goal. If, like me, you’re simply trying to get a handle on your debts, you may prioritize you money to go entirely towards your debts (meaning your funds no longer go towards things like coffee or clothing).
Getting clear on what you want and why you want it can help make the changes that come with personal financial success a bit easier.
In the comments: What are some of your values? How do they show up in your daily life? Your finances?