What Are Financial Values And How To Align Them With Your Personal Goals
Financial values are the beliefs and core principles that often guide your money decisions, shaping how you save, spend, and invest. Understanding your financial values can help you better align your financial behavior with your personal goals, ensuring you make decisions that truly reflect what matters most to you.
In this article, we’ll explore how to identify your financial values and provide practical guidance on aligning them with your personal financial objectives.
At Cooke Wealth Management, we help clients build and live out financial plans that honor their unique values and aspirations.
Understanding Financial Values
What Are Financial Values?
Financial values are the fundamental beliefs and principles that often drive your financial decisions and how you currently use money. They serve as a compass for how you manage your money, often influencing every aspect of your financial life. For example, if security is a core financial value, you might prioritize saving and avoid high-risk investments. Other common financial values include freedom, generosity, and stability.
When it comes down to it, our financial values are not much different than our personal values. For example, if family is a core value, you might prioritize spending on family activities or for going extra hours at work to spend time with loved ones. If flexibility is important to you, you might find yourself prioritizing short-term saving or a little extra “slush” in your budget or finding yourself in debt to provide said flexibility.
Your values not only shape your behavior but also play a crucial role in decision-making. Whether it’s intentional or not, these values guide how you use money and they help you make choices that align with what truly matters to you.
Why Financial Values Matter
Your financial values can have a significant impact on your overall financial well-being. They influence how you allocate resources, set priorities, and approach financial planning. For instance, someone who values independence might focus on building a strong financial foundation to support a self-sufficient lifestyle, while someone who values generosity may prioritize charitable giving. Understanding what are financial values and how they influence your financial behavior can be essential for creating and maintaining a financial plan that aligns with your goals. By making a plan that reflects your values, you’re more likely to achieve a sense of fulfillment and peace of mind.
Identifying Your Financial Values
Self-Reflection and Awareness
Identifying your core financial values can require self-reflection, an understanding of your financial goals, and an honest examination of your financial behaviors. Start with what’s important to you: both short- and long-term. Ask yourself what you want your current and future lifestyle to look like. What are your current or future concerns? Then, put it aside and consider your current financial habits and the motivations behind your decisions. Ask yourself questions like “What drives my financial choices?” “What do I tend to prioritize when it comes to money?”
If you're a Christian, God is likely a big part of your values, and now is a great time to involve him! Start on the above with what you think, and then prayerfully ask God if that aligns with Him or what he wants for you and your family. Then, go back and update your initial thoughts.
When you’re done, what do you notice? Reflecting on these questions can help you uncover the values that guide your financial decisions. Understanding your financial values can give you a chance to re-evaluate. It can help you decide to continue or change your behavior and align your finances with what truly matters to you.
Common Financial Values
Common financial values include family, education, luxury, health, stability, independence, legacy, security, and generosity. Stability might represent a desire for a predictable financial future, while independence could reflect a value in self-reliance. Legacy may indicate a focus on leaving something meaningful for future generations. It’s important to recognize that different values can coexist, and sometimes they may even conflict. For example, a desire for freedom might clash with the need for security. Balancing these values is key to creating a financial plan that works for you.
Aligning Financial Values with Personal Goals
Setting Financial Goals Based on Values
Once you’ve identified your financial values, the next step is to revisit or set goals that reflect those values. For example, if security is important to you, your goals might include building an emergency fund, increasing your savings, or investing in low-risk assets.
If you identified a disconnect between your values and how you're currently using money (your habits), it likely means there's an opportunity for improvement. Your goals might be focused on changing those habits. If you value generosity but don't seem to give, you might decide to start giving 5 or 10% of your income. If you value stability but continue to go into debt, your goal might be to build a budget based on your income and stick to it. - Your goal could be to eat out less, get rid of the storage unit, or decide ahead of time how you will use this year's bonus.
Aligning your short-term and long-term goals with your financial values helps ensure that your financial plan is consistent with what you care about most. This alignment not only helps you stay on track but also provides motivation to achieve your financial objectives.
Balancing Competing Values
It’s not uncommon to have multiple financial values that conflict with one another. For instance, you may value both independence and security, but pursuing one might compromise the other. In such cases, it can be essential to prioritize your values and find a balance that works for you. Strategies for managing these conflicts include setting clear priorities, identifying targets, being flexible with your goals, and regularly reassessing your values as your life circumstances change. By prioritizing and balancing what matters most, you can create a financial plan that aligns with your values without feeling pulled in multiple directions.
Implementing a Values-Based Financial Plan
Creating a Financial Plan
Developing a financial plan that aligns with your values often involves setting clear goals, having a budget, and making informed investment and savings decisions. Again, start by outlining your financial objectives and goals based on your values, then create a budget that reflects your priorities.
Knowing where you stand in accomplishing your goals can help you adjust your budget accordingly. For example, if you're on track for retirement, you might find a portion of your savings and can be directed to fund other goals. Investing according to your priorities means being intentional with your savings, often choosing vehicles or assets that align with your risk tolerance and timeline. This approach allows your financial plan to be not only practical but also meaningful, as it is rooted in what you truly care about.
Regular Review and Adjustment
As life changes, so may your financial values and goals. Regularly reviewing your financial plan can be essential to ensure that it continues to align with your values. This process can allow you to make necessary adjustments as your circumstances evolve, keeping your financial plan relevant and effective. By staying proactive and adaptable, you can maintain a financial strategy that supports your evolving needs and priorities.
The Role of a Financial Advisor
Guidance and Support
A financial advisor can play a crucial role in helping you identify and align your financial values with your goals. They provide expert guidance in creating a values-based financial plan, helping you balance your goals, and make financial decisions that align with your priorities. Additionally, they're there to help you stay on track. When things change, or a new opportunity arises, your financial advisor can help you identify and weigh your options.
Working with a professional can help you navigate complex financial situations and make informed choices that reflect your values.
Selecting the Right Advisor
When choosing a financial advisor, it can be important to select someone who will work to understand and respect your financial values. Look for an advisor who takes the time to understand your unique situation and priorities, and who communicates clearly and transparently. A strong advisor-client relationship, built on grown trust and mutual respect, can also be essential for creating and maintaining a financial plan that truly reflects your values..
Aligning Your Financial Journey
Understanding "what are financial values?" can be crucial in achieving your personal financial goals. By proactively aligning your financial plans with your values, you can set a strong foundation for long-term success and fulfillment.
Living in alignment with your financial values can not only bring clarity and purpose to your financial decisions but also help your financial journey support your broader life goals.
At Cooke Wealth Management, we specialize in helping you integrate your financial values into a personalized financial strategy, aimed at guiding you toward a more secure and meaningful financial future.
FAQs
1. What are financial values?
Financial values are the core beliefs and principles that guide your financial decisions and behaviors, shaping how you save, spend, and invest money.
2. Why are financial values important?
Financial values influence your spending habits, savings goals, and investment choices. Understanding your values can allow you to change habits, make informed decisions, and ensure that your financial decisions align with your life priorities.
3. How can I identify my financial values?
Reflect on what's important to you both financially and personally, consider your financial behaviors, and what you tend to prioritize financially, such as security, freedom, or generosity, to uncover your core financial values.
4. How do financial values affect goal-setting?
Financial values provide a foundation for setting and prioritizing meaningful and realistic financial goals, helping you ensure that your objectives reflect your true priorities.
5. How can I align my financial values with my personal goals?
Regularly review your goals and habits, adjust your financial plan and use of money to reflect your values, and consider seeing guidance from a financial advisor to help..