Importance of Financial Values

Chances are you might know people who are unhappy with their lives because they don’t make enough money, they don’t think they’re beautiful enough, or maybe they don’t have enough Instagram followers to build their brand. Their unhappiness is linked to what they value.

Financial Values

Personal values can collectively be described as an internal measuring stick. This measuring stick is based on what you believe is important in life, and it’s what you use to determine whether or not you’re a successful person. Common values include authenticity, influence, fame, beauty, loyalty, peace, and happiness.

Similarly, financial values can also be collectively compared to a measuring stick. But this measuring stick is based on your beliefs about money. More specifically, a financial value system includes your beliefs on debt, saving, investing, spending, or ways to earn income.

Financial values are often rooted in personal values. For example, a person who places value on instant gratification may feel more comfortable with debt than someone who values stability.

You can get a sense of your own financial values by answering the following questions:

  • Would you rather rent or own a home?

  • If you were to buy a car, would you rather go into debt or buy it outright?

  • If you need income right away, would you be willing to take a minimum-wage job temporarily or would you wait around for an opportunity to earn more?

  • If you saw something you really liked in a store, would you go over the budget to buy it or wait until you’d saved enough to buy something else just like it?

  • Would you pay a professional for a plumbing issue or try to figure out how to fix the problem yourself?

Why Should You Care?

According to a 2018 Forbes article, 44% of Americans don’t have enough cash to cover a $400 emergency; 43% of student loan borrowers are not making payments; 38% of U.S. households have an average credit card debt of $16,048, and 33% of American adults have $0 saved for retirement. A more recent report from Bankrate says that 78 percent of American adults can’t sleep because they’re worried about some financial problems.

The statistics suggest that many people aren’t financially secure enough to sustain living the lives that they value.

So, what’s the solution? Financial security comes from good habits, and good habits come from strong, clearly defined values.

How to Define Your Own Values

You can start taking control of your finances by writing down your top five personal values and a corresponding financial value for each personal value. See the examples below.

  • Example 1:

  • It’s important to me to have time to spend with my grandkids and to be able to buy them Christmas and birthday presents (personal value)

  • Therefore, it’s important for me to save beyond basic living expenses for my retirement period (corresponding financial value)

  • Example 2:

  • My creativity and self-expression are important to me, so I want to be able to design and live in my own home as soon as possible (personal value)

  • Therefore, it’s important for me to maintain an above-average credit score and be prepared to manage recurring debt i.e. a mortgage (corresponding financial value)

If you want to go even further with this, Smart About Money’s “LifeValues” course offers a comprehensive lesson on how to develop strong financial values. Within the course is a 20-question quiz designed to get you to think critically about the motives behind your financial decisions. In the end, there’s a breakdown of how your results reflect your personal values. Other topics of interest include “How to Use What You’ve Learned About Your Life Values,” “Break the Cycle of Family Life Values,” “Life Values for Spouses and Partners,” and “Life Values for Financial Educators.”

Key Takeaways

  • Personal values refer to what you think is important in life and the standard by which you measure your success.

  • Financial values are your beliefs about money.

  • Personal and financial values that are both strong and clearly defined can lead to good money habits.

  • Good money habits help you sustain the type of lifestyle that you value.

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