We all have values that are uniquely important to us.  When I think of values, I’m often reminded of a picture hanging in the front entry way of our home that displays the words of faith, family and friends.  These values are important to me and I generally try to make decisions or set priorities based on them in my life.

Since money is such a large part of our everyday life, our values should drive our decisions in how we use it and for establishing personal finance goals.

Live values should determine decisions

David Bach, financial planner and author says in his book “Smart Couples Finish Rich”, your life values should determine every decision you make.  He believes once we determine our values, we can create a meaningful financial plan.

Where you live, how much you spend, what you focus your time and energy on – all are affected by your values.  Your values color how you communicate with your partner, how you raise your children, and how you feel about what you have in your life.  Your values can determine how hard you are willing to work to achieve your financial goals, how much money you currently spend, and how much money you will actually need at retirement.

The Crown Money Map points us in the direction of value based planning.  On the back of the Money Map you’ll find questions that ask your life purpose in areas such as faith, family, friends, and service to others.

Why are these areas important?  They are the fuel behind every financial goal on the map.  The purpose and values around each area tells you why you’re trying to achieve each financial goal and it will help provide the motivation needed to persevere through the challenging times.

Values are different than goals

While determining values and goals it’s easy to get confused between the two of them.  Becoming debt free in 2 years is an example of a goal.  However, the reason behind the debt free goal can differ from person to person based on unique values.

Perhaps some people want to become debt free so they can spend more time with family.  This is a value based on family relationships.  Other people may want to become debt free because of Biblical guidance.  This is a faith based value.  The reasons will vary and in some cases there may be more than one value supporting the goal.

Excercise to plan goals according to your life values

1. Make a list of the most important values in your life.  Examples of values are faith, family, friends, health, security, etc.

2. Identify 1-2 goals per value.  For example, one of the things you might value is friendships or relationships with others.  Goals associated with relationships might be to spend more time with your friends this year by going on a vacation together, or as simple as inviting one friend to dinner per month.  These goals could identify a specific savings goal for vacation or could identify a new area of your spending plan for dinner with friends.

3. Determine the priorities for your goals.  For savings, getting out of debt and other personal finance goals, use the Money Map or Baby Steps to follow a good plan of attack.  You may have a financial security goal, but it may not be the best time to save 6 months of living expenses if you need to get out of credit card debt.  The Money Map or Baby Steps help set the priorties for each goal.

Going through a value based planning exercise is something to consider doing each year.  Either as a couple or individual, you can build current year goals and longer term goals based on the values identified.

Have you had any experience in planning according to your values?

Image by Erin.

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• Establish Your Personal Finance Goals