Values and Budgeting – Part Two

This post may contain affiliate links. FinanceSuperhero only recommends products which help Restore Order to the World of Finance.

In my previous post , I proposed that because change is inevitable, we should do anything and everything within our power to take action to create positive changes, thereby pursuing continual growth. In order to effectively pursue this growth, a wise Superhero should create goals. Before we unpack these ideas further in relation to our personal finances, I want to make some important distinctions.


 
Goals Are Empty Without a Foundation of Values

If you think you are motivated by goals and achievement, you are wrong. “But I have achieved a lot in my life,” you say. Congratulations! I want you to achieve all of your goals. I certainly want to achieve all of my own goals. However, the goal itself is not the driving force, as we saw when reflecting upon the rapid rise of a young phenom named Michael Jordan. Values are the driving force for meaningful goals. Show me a significant goal, and I will point out the values that underpin the goal.

Side note: It is possible to achieve a significant goal that is not underpinned by one of your highest values. For example, I could set a goal to complete a triathlon in 2017. Do I think I could complete this goal? Absolutely. Do I have any interest? No. Why? While I value Health and Personal Wellness, the driving value that leads me to exercise is Leisure, believe it or not. Swimming and biking are not nearly as leisurely to me as is running -I know, feel free to groan. However, I think we all can agree I am pretty likely to phone it on the triathlon and end up running a marathon instead.

Discover Your Values

Now that we have seen the importance of our values in relationship to our financial goals, allow me to present a few simple questions which are designed to help you quickly identify your values. All of the following questions are related to the concept of Purpose. Think of Purpose as the reason you wake up in the morning.

  • What or whom do you live for?
  • What activities and experiences provide you with deep fulfillment?
  • How do you best contribute to the world?
  • What kind of legacy do you wish to leave?

Honest and in-depth answers to these questions should point you clearly to  your Purpose and, subsequently, a set of easily identifiable values. Alternatively, values may point to purpose, depending upon how your line of thinking.

Think of Purpose as the reason you wake up in the morning.


 
A Non-Financial Example of Values and Purpose

During a European college band tour in 2005, I met a Pastor in a small Austrian town who clearly understood his life’s purpose, identified his values, and adhered to them by his actions. As he told me his story, I was fascinated by the seemingly-disconnected details of his remarkable life. This was a man who had grown up in the US, yet here he was, complete with a southern drawl and Colonel Sanders beard, leading a flourishing congregation in a picturesque town nestled between snow-capped mountains. Curious, I asked him how he had been called to his position. His response, which puzzled me for years, is much clearer today in light of my understanding of the principles of purpose and connected values:

“Called? I wasn’t called. I had to go.”

This was a man who knew his purpose and acted upon it. I believe he was compelled to do so. He left his comfort zone in order to fulfill his purpose, and at the intersection of purpose, values, and action, he found fulfillment.

What Happens When We Discover Our Values and Purpose?

Like the Pastor above, when we discover our values and purpose, we will naturally shift toward spending the majority of our time and energy on impactful activities. Hint: Highly-successful people do not watch 6 hours of television and compulsively check their Facebook feeds every fifteen minutes. Successful people allow their purpose and values to drive their actions.

Your Financial Values

Armed with knowledge of your personal values, now let us answer the following adapted questions:

What is your primary reason for earning money?

What use of your money do you find most fulfilling?

How do you best contribute to your financial well-being?

What kind of financial legacy do you wish to leave?

I believe the answers to these questions will show you your Financial Values. Here is an example, which utilizes my brief answers to the above questions:

What is your primary reason for earning money?

Living well in the present and the future.

What use of your money do you find most fulfilling?

Giving to others.

How do you best contribute to your financial well-being?

Carefully managing my family’s income to ensure it aligns with your goals and values.

What kind of financial legacy do you wish to leave?

I wish to change my family tree and have an impact that is several generations deep without breeding a sense of entitlement in my children and grandchildren.

Did you notice any themes? My financial values are Moderation, Giving, Stewardship, Order, and Dependability. I craft each monthly budget with these values in mind.

How to Start Values-Based Budgeting

I strongly believe that getting on board with a values-based budgeting approach can be the boost you need to reinvigorate your financial pursuits, expand your horizons, and achieve your dreams. Here are a few examples of how this approach has revolutionized my own budgeting process in the past few months:

  • Mrs. Superhero and I discovered that our spending on restaurants and expensive dinners was far out of alignment with our values. Yes, we value time for relaxation, and spending money on a night out certainly provides that. However, we realized we were not gaining additional relaxation benefits from dining at a local five-star steakhouse versus spending $20 at Red Robin. This freed up a significant percentage of our budget, which we re-dedicated toward toward saving and reducing debt.
  • I am strongly considering reducing or eliminating my cable TV package. Intellectually, I grasp the enormous benefits just waiting to be realized when and if I pull the trigger on this change. For me, cutting the cord will be equivalent to what many people experience when they cut up a credit card they have had for decades. It will be painful, but I am starting to realize I value my financial independence far more than the ability to access hundreds of channels. As a sports fanatic, I will, however, need to ensure that I have alternate systems in place prior to cutting the cord.
  • Mrs. Superhero works extremely hard in her day job as a music teacher and as a self-made entrepreneur with her music lesson studio. After discussing her values, she and I have decided to reinvest more of her income in needed items for the studio in the near future, such as tablets, method books, and an accounting service.

To get started, ask yourself the following questions:

  • How can my values influence my goals and my budget?

Make a list of your values and keep them near by as you assemble your budget.

  • How do my recent actions misalign with my values?

Track your spending actions for one week (or better, one month) and connect them with your associated values. If they do not align, you have discovered an opportunity to improve your budget.

  • How do my recent actions align with my values?

Continue to implement these steps to stay on track.

  • What false values are indicated by the patterns of my actions?

For example, am I spending too much money on restaurants, clothing, or miscellaneous categories, all at the expense of other goals?

 

Build on SMART Goals to Achieve Success

When you have built a successful budget that have been able to adhere to for several months, you are on track to achieve your goals. If you discover that you are not sticking to your budget, I have one final recommendation.

Most people today are familiar with the concept of SMART Goals. Smart goals are intended to be Specific, Measurable, Attainable, Realistic, and Time-Oriented. I would like to propose a simple addition to this concept.

You guessed it: Values.


 
Introducing the V-SMART Goal: Values-based, Specific, Measurable, Attainable, Realistic, and Time-Oriented

I believe that the creation of V-SMART Goals can be the jolt that you may need to finally establish goals and retain the momentum and desire to fully accomplish them. Allow me to provide a simple example:

SMART Goal: I will pay off $5,000 of debt on my MasterCard prior to July 1, 2016, by limiting my discretionary spending in the areas of Clothing and Entertainment.

V-SMART Goal: In order to align with my values of Stewardship and Financial Independence, I will pay off $5,000 of debt on my MasterCard prior to July 1, 2016, by limiting my discretionary spending in the areas of Clothing and Entertainment.

Just by making a simple distinction like you read above and keeping values at the forefront of your mind, I am confident you will increase your success. The consideration of values has added a new depth and breadth to financial planning and budgeting for me and Mrs. Superhero. It is supporting faster achievement of our goals.

To bring this post to its conclusion, I would like to leave you with a profound reminder from Henry David Thoreau:

What you get by achieving your goals is not as important as what you become by achieving your goals.

Facebooktwitterrss

4 thoughts on “Values and Budgeting – Part Two

  1. Wow! Having taken leadership classes throughout college and professional development, I can honestly say I’ve never heard anything new around goal-setting. This is super fresh and relevant, and definitely helps give some longevity and life to goals (which can often just be black and white, achieved vs. unachieved). My goals will be V-SMART from now on, great post!

    1. Thank you for the feedback, Paul. I am very glad that this post had a powerful impact on you, despite all of your leadership training. I will admit that I was worried that this post wouldn’t be well-received, but the idea of merging values with SMART Goals had been on my heart for many months before I wrote the post. Knowing that it reached even one person makes me very happy!

Leave a Reply

Your email address will not be published. Required fields are marked *