One of the frequent questions I get asked is given the pandemic, should a household rethink their basic financial values? I believe that now is a great time to do a money reset if your situation has changed. Money is a much more precious resource for all of us than it was prior to the start of the pandemic. Let’s look at what financial values are and which ones you could revisit.
Before we begin, I want to remind you why having a foundational set of financial values is so important. Personal finance is different for everyone because it is just that - personal. The root cause of why there is so much variety in how people handle (or don’t handle) their money is because we all have different matters that are important to us. What we value in life influences the kinds of goals we set for ourselves and our individual goals will determine the actions we take to reach them. If you can understand what drives your decisions, you can better manage your financial affairs.
What Are Your Personal Financial Values?
Financial values are a person's or household’s principles or standards of behavior when it comes to money. They are the judgments about the importance of money. It is a great exercise for you and your partner (if you are in a household) to take 15 minutes and talk about the key matters that you value most in life — what brings you the most joy, what you’re striving for, what forms of money feedback you need and how you want to spend your non-work related time. Make a list of them and, if possible, identify how money relates to supporting those values and making them happen. I will give some examples of how to do this later.
Financial values fundamentally boil down to agreeing on the purpose of money in your life. Some examples of values are how much non-work related free time you want, how large a family, how much travel you want to do, what charitable contributions you want to make, the importance of your physical and mental health, and where you want to live – in the suburbs or in a large city. Answers to these value questions will each have a monetary impact on your planning and treatment of money. Spending the time to agree on what they are will also minimize conflicts in your relationship about how to manage money. I have learned that if you can agree on the major values the day-to-day minor issues will take care of themselves.
Sample Questions You Might Ask Yourself About Money
Let’s take a look at key money areas and the questions you should ask yourself as you develop or revisit your financial values.
Money Knowledge
1. What is the level of your money knowledge?
2. Have you taken a personal finance course?
3. What did your parents teach you about money?
4. How much time do you spend each week learning about money?
Lifestyle
1. What kind of lifestyle do you want?
2. Are you financially secure? If not, how badly do you want to be?
3. Do you want to travel and to where?
4. Do you need to keep up with your friends’ lifestyles?
5. How much time to you want to devote to work? Do you live to work or work to live?
Earning
1. How do you feel about your current income? Are you making what you deserve?
2. How do you feel about your future earning potential?
3. Do you want or need a side gig?
4. Do you need to upgrade your skills to get a better job?
Spending
1. Do you consider yourself a spender?
2. How often are you an impulsive spender?
3. What is your biggest weakness when it comes to spending money?
4. What are your philosophies on spending?
5. Do you plan your big purchases?
Debt
1. How much debt do you currently have?
2. Are you current with all your debt service payments?
3. Do you know and manage your credit scores?
4. If you want to buy something are you opposed to going into debt to buy it?
5. What is your feeling about keeping a balance on your credit cards?
6. Do you want to live a debt free lifestyle?
7. What are your overall thoughts around debt?
Saving Money
1. Which is more important to you? Saving money or paying down debt?
2. Do you have an emergency fund? Do you think you need one?
3. Do you consider yourself a natural saver?
4. Do you have an ongoing effort to reduce your living expenses?
5. What are your thoughts about saving money?
Managing The Details
1. How much time do you spend each week managing your money?
2. How do you stay on top of your personal finances?
3. Are you financially organized?
4. Did you know that keeping track of finances is the foundation to personal finance success?
5. How do you keep track of your finances? Do you use a budget app?
The answers to these questions and others should translate into money actions you should take to reach your goals. Here are some examples of financial values and how they translate into goals to act upon:
Financial Value Goals
Financial security Have a fully funded emergency fund
Travel annually Save monthly for one big trip per year
More family time Live on one income or be a contract worker
Improve health Workout at home with your own equipment
Help others Give a certain amount of time or cash to charity monthly
Summary
The pandemic has created the necessity for all of us to reconsider our approaches to money. Many of the rules of how to handle money have changed for the short and long term. Sitting down and objectively revisiting your financial values in light of what has happened and what you have learned is likely needed. Be sure to be honest with yourself and answer your own set of questions. It is always amazing to me that once the facts are known that people will take the right actions to address their situation. How about you?
If you like our posts, you’ll love our books. Our sole source of income for the FinancialVerse comes from sales of our books. If you would like to know more about the practical side of your money, give one of our books a read.
Our two most recently released books are:
Starting October 17, you can receive 20% off your purchase of Today's Life Insurance during our Website Only Sale! Use Discount Codes: FV141 for Print or FV241 for the eBook.
The third book in the series, Today’s Annuity Products – A Tool To Create Protected Lifetime Income will be released in November.
The FinancialVerse works to help you identify life’s financial challenges and provide suggested resources that you can pursue to educate yourself. The content is focused on consumer education and does not promote any particular product, service or company. If you value the content we provide, please follow us on Facebook and Twitter, forward this post to your friends or ask others to subscribe to our free Moneysavers. Please remember we do not in any manner sell or share your contact information.
Thanks again for your interest in improving your financial knowledge!