Discover Your Financial Values
We all relate to the idea of having values. However, we tend to think of things like honesty and kindness when we consider our values. Though you might not think about them, your financial values are important to your happiness and future, too.
Financial values are your beliefs about earning, spending, saving, and money management. The past two years have caused many Americans to rethink their priorities and their work/life balance. This means taking a good look at your financial values and goals too.
“When you possess a clear understanding of what’s most important to you, you’re much more likely to experience the financial life you desire,” says Michel Norton, Senior Vice President Investments for David Lerner Associates. “Take the time to discover your financial values.”
Choose your financial values and enjoy an abundant and satisfying financial life:
- Imagine you have a short time to live. Suppose your doctor told you that you only had 5-10 years to live, how would you spend your money and handle your finances? Would you buy a boat and sail the world? Would you scramble to save as much as possible for your children’s education? Would you pay off your mortgage?
- Think about your non-financial goals. Is it your dream to visit Paris? What are your health goals? Do you need assistance losing 25 lbs.? Do you need to see the dentist more regularly?
- Your most important non-financial goals will help to determine your financial values.
- Imagine how you would live if your income dropped. If your household income dropped by 20 percent, what would your family budget look like? What activities would still make the cut? How would you spend your leisure time? Consider which activities and luxuries would be the first to go. How would your saving and investing habits change?
- Imagine how you would live if your income increased significantly. Imagine you’re earning an extra 50 percent. How would you live? What new items, activities, and services would you add to your life? You might even drop a few activities to make room for something new.
- The changes you would make can tell you a lot about your financial values. Would you spend much of the increase and save little? Would you save the entire amount?
- Would you finally be able to afford something very meaningful to you? The activities you’re currently engaging in might not be your first choice if you had more money available to you.
- Consider your retirement. How would you like to live? Where would you like to live? How important is your retirement compared to the present? Would you rather live well now or in the future? Is there a way to balance the two? You can use this retirement calculator to help you figure out what you will need.
- How much of your time would you trade for 20 percent of your income? If you earn $50,000 per year, how much of your free time would you give up for an extra $10,000? Would you give up all of your vacation time for the entire year? How many weekends would you trade for an extra 20 percent? Or would you be willing to give up income to get more time for other activities?
Consider your financial values. Do your financial habits match your core financial values? Take the time to consider how your life would change if your income changed significantly.
Most of us know which personal characteristics are the most important to us. Discover your financial values and plan your finances accordingly.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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