When it comes to money, you might think it’s all about the head – crunching numbers, analyzing spreadsheets to figure out how much you have, and calculating what you need to achieve your financial goals. But shouldn’t financial decisions be made from the heart – from your feelings and emotions, to what you value and what’s important to you? By definition, values represent our unique essence. They highlight what each of us stands for and guide our actions and choices.
Recent developments at Thrivent 2023 Financial Crisis Survey*Americans feel they have to sacrifice their most important values in order to achieve other important financial goals. These survey results suggest this disparity is driven by concerns about the economy, fears of a recession, and high levels of personal debt. Many survey respondents agreed that values are important, but feel unsure how to base important financial decisions on them.
Why values and financial decisions clash
of Financial Crisis Survey It turns out that Americans often prioritize certain financial needs, even at the expense of their personal values and how they spend their money.
For example, let’s say some of your core values are service and generosity. Maybe you dream of organizing a local food pantry for the homeless, but monthly bills and household payments eat up most of your paycheck. Or maybe your number one value is family. Maybe you want to save for your children’s future college expenses, but worry that it will come at the expense of your own retirement savings.
Examples of conflict between the head and the heart all have a common cause: uncertainty about one’s personal financial situation. This conflict can sometimes prevent you from doing the things that matter most because you think you don’t have money. But it doesn’t have to be this way.
“Many people expect this period of economic uncertainty to continue, and their anxiety may be preventing them from making financial decisions that reflect their intentions and values,” said Lauren Hansen, vice president at Thrivent Advisor Group. “There’s an increased need for purpose-based financial advice to help people take control of their money now and ensure those decisions are always connected to their core purpose and guiding values.”
3 steps to identifying your core values
What does it mean to align your goals and values? It’s different for everyone. The only way to know what it means for you is to deeply understand and name the values that are most important to you and your loved ones.
Step 1: Self-reflection.
Ask yourself these questions and write down the answers or discuss them with your loved ones.
- What is important to you? Has it always been important to you?
- What will it take for you to be able to look back and say you’ve lived a great life?
- What drives your decisions and aspirations? Think about a time when you had to make a difficult choice. What ultimately mattered most?
- Think back on the key moments and significant achievements in your life. What brings you the most joy?
- Think about the people you love and respect and the values they demonstrate. Do you share those values?
Step 2: Make a list of your most important values.
Based on your answers to the questions above, make a list of your values and identify your top three to five.
Some common values include:
- family
- faith
- Health and Wellbeing
- Financial Stability and Security
- Service, community involvement and helping others
- Meaningful friendships
- balance
- Meaningful work
Step 3: Have a conversation.
Discuss the list with people who know you best. Are they aware of anything you may have missed? If you have a partner or spouse, include them in the discussion so you are on the same page and can make the best decision for you and your family.
How to align your financial decisions with your values
Depending on what values you identify as most important to you, here are some ideas for making financial decisions that relate to those values.
If your values include family, safety, and caring for loved ones:
Family is the most important thing 75% of Financial Crisis Survey Answer: Protecting your family’s financial future, both in the short and long term, should be reflected in your financial plan. Your plan can include things like:
- Save for a big goal For example, things that bring short-term joy and fulfillment to a family, such as a house, a car, or family vacations.
- Life insurance This is to prevent your loved one from being forced to make major lifestyle changes if an unexpected event occurs.
- Real Estate Strategy Give your loved one the freedom to pursue their dreams with the peace of mind of financial stability.
If your values include financial security:
Financial stability is 40% Ten percent of all respondents believe this is a more pressing issue for Millennials and Gen X (42%) than Gen Z and Baby Boomers (38%). If this is one of your top priorities, consider the following:
If your values include faith, community involvement, and compassion for those less fortunate:
Faith is 39% 10% of respondents overall value this highly, with Gen Xers (43%) and Baby Boomers (46%) placing even more importance on this. Some ideas to consider:
Set goals for the behaviors you want to achieve and hold yourself accountable
Once you’ve decided what’s most important to you, you’re ready to put it all together: write out the financial decisions you want to make and how they relate to your values. Start by setting goals for how you’ll get there. A proven approach to goal setting is to of SMART Framework.
SMART is an acronym that stands for five specific steps to setting meaningful, actionable goals.
S: Specific
What is your goal? specific.“I’d like to save $30,000 for a down payment on a house.”
M: Measurable
What is your goal? Measurable. “I’ll put $500 a month into a dedicated savings account.”
A: Achievable
The goal AchievableInclude realistic goals and a contingency plan if something goes wrong. “If unexpected expenses derail your plans, I’ll consider gig work in the coming months to make up the difference and supplement my income.”
R: Related
They are Related It’s about what matters most to you: your values. “Homeownership can bring your family joy, security and generational wealth.”
T: Time limited
Finally, your goal is With a deadline. “We will achieve our goal within five years.”
How to hold yourself accountable for achieving your SMART goals
Another helpful tip is to have an accountability partner who will hold you accountable for sticking to your plan. This partner could be someone like:
- Family or friends Someone who understands what you’re trying to achieve and can support you when you hit roadblocks, or simply help keep you on the right path.
- coach, Available through Money Canvas—A free, one-on-one money coaching program that helps people develop healthier financial habits.
- Financial AdvisorSomeone with the knowledge and expertise to help you get the guidance and financial clarity you need to put your plan into action and turn your beliefs into action.
Our experts can help you create a financial plan that aligns with your values
If you are receiving guidance from an expert, 66% of the people Financial Crisis Survey Consult with a financial advisor, create a plan, virtual Setting helps align values with financial strategy. A documented financial strategy that is regularly reviewed helps people make the most of their money while keeping their values top of mind, rather than putting them aside.
Conclusion: talk Thrivent Financial Advisor Who can guide and help you follow your heart and achieve your future goals?
Featured Photo Credit: ©Thrivent.com
*Methodology: Morning Consult partnered with Thrivent to conduct a study to understand how people prioritize their values in financial decisions. The survey, conducted in June 2023, asked 2,500 adults about their personal values, financial decisions, and financial management tactics. The overall survey respondent data has a margin of error of +/- 2%.
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