Money values are a set of beliefs about money and how it’s meant to be used. Do you believe that money is meant to be spent and enjoyed in the moment? Or do you believe that watching your pennies so you can retire early is your ultimate financial goal?
Whether someone’s financial values are positive or negative can influence the decisions they make with money. For example, research suggests that children who learn positive money lessons early on are more likely to be better with money and have stronger relationships as adults.
But where do money values come from? And are they set in stone or can they change over time? Understanding the impact of money values is an important step in improving your financial health. Here, you’ll uncover:
• What are money values?
• How are money values formed?
• What are your money values?
• How can you better align your values and finances?
What Are Money Values?
When talking about values in finance or in general, you’re talking about beliefs. Specifically, values are beliefs that motivate people to action in some way and drive behavior. If you apply that concept to finance, you could define money values as a set of beliefs that drive financial decision-making.
Financial values can be formed in childhood through your first-hand experiences with money. For example, if you grew up in a household that emphasized saving and avoiding debt, then you might be more inclined to value the importance of stashing cash away and delayed gratification as an adult. On the other hand, if you grew up in a home with a parent who was a compulsive shopper, then your money values might tell you that buying things constantly is normal behavior.
Financial values can vary widely from one person to the next, and it’s possible that you may have developed money values without being consciously aware of them. But those values can affect the decisions you make when it comes to saving, spending, and handling debt.
How Do Money Values Work?
Money values work by shaping your decision-making with money. They act as a guide to tell you what’s acceptable behavior for managing money and what isn’t. So again, someone with positive money values might believe that carrying excessive amounts of debt or making unnecessary purchases are bad financial habits to avoid.
If you have poor money values as an adult because of your childhood experiences with money, then you might not see anything wrong with being in debt. Or you might simply think that having lots of debt is a fact of life, and there’s nothing you can do to change it. For that reason, having negative money values can be dangerous to your financial health, today and tomorrow.
The good news is that it’s possible to change your money values over time. It can take an effort to learn new values and behaviors and adopt a new money mindset. However, the effort can be worth it if you’re not happy with your financial situation and you’d like to change it for the better.
Why Are Money Values Important?
There are certain fundamentals for personal finance that can help you to get ahead financially. These include things like budgeting, avoiding high interest debt, and saving consistently. Your money values matter because they can determine how committed you are to practicing good financial habits.
Here are some things that positive money values can do for you:
• Help you to be more disciplined with your money, rather than allowing money to control you
• Make it easier to keep track of money because you’re committed to sticking to a monthly budget and avoiding unnecessary spending
• Give you clarity when setting up financial goals so that you know exactly what it is you want to achieve with your money
• Underscore your purpose for pursuing those goals so that you stay motivated and on track
• Make decisions confidently with your money, whether it’s where to invest or what to say to a friend who asks for money
Financial values can act as a guide point or compass for you so that you don’t feel like you’re operating in the dark with money. Understanding your personal values toward money can also help with navigating relationships with people who might have different financial values. The clarity you have about how you want to manage your money can help you stay the course to meet your goals.
Tips for Determining Your Money Values
If you’re not sure what your money values are or you’re questioning what they ought to be, figuring it out doesn’t have to be difficult. There are some simple exercises you can do to drill down to your financial values and what money means to you.
Creating a List of Where Money Impacts Your Life
When setting up a financial plan that revolves around money values, it’s helpful to first understand how money affects your life. Making a list of areas where money impacts you the most can give you perspective on what money values you have and how they drive your decision-making.
For example, consider how money affects you on these levels:
• Friendships
• Romantic relationships
• Family relationships
• Work and career decisions
• Hobbies and recreation
• Health
• Long-term planning (whether that means home ownership or retirement)
Also, think about how money affects you mentally and emotionally. If money is a constant source of stress, for example, that could be a sign that your money values might be getting in the way of good financial habits.
Creating Goals for What You Want to Accomplish
Setting goals can motivate you to make changes to your financial outlook, whether big or small. It can also help you to determine what your money values are and how your goals align with those values.
Making two lists — one for short-term goals and one for long-term goals — can give you an idea of what you’d like to do with your money. For example, financial short-term goals might include:
• Saving an emergency fund
• Setting aside money for a vacation
• Saving up for new furniture
Financial long-term goals on the other hand might be things like saving for retirement or putting a large down payment on a home. You can never have too many money goals, but it’s important to be realistic about what you can achieve at any given time.
Visualizing Where You Will Be in 5-10 Years
Many people use a five-year plan to map out their goals and financial progress. If you’ve never tried this before, consider where you’d like to be five or 10 years from now.
The idea is to create as vivid a picture as possible. For example:
• Where will you live?
• Will you rent your home or own it?
• What kind of work will you be doing? Will you be working a 9-to-5 job, be in grad school, or running your own business?
• How much money will you have in savings?
• How much debt will you have?
• Where will you be in terms of progress towards your long-term money goals?
Visualizing your future self is an important exercise because it gives you something to aim for. You can start working toward it now by adapting your money values to reflect where you want to go.
Prioritizing Your Goals
If you have multiple financial goals, you might not be able to knock them all out at once. So you’ll have to decide which ones are most important to focus on first.
For example, many people question whether it makes sense to save or pay down debt. Saving first can give you a small cushion so that you don’t have to turn to a credit card if an emergency comes along. On the other hand, putting off debt repayment can mean paying more in interest over time. Which side of the debate you land on can clue you in as to what your money values are.
You can go through each of your goals and ask yourself how urgent that goal is for you. That can help you to better organize your list so you know what to focus on first.
Living Out Core Values
Once you’ve identified what your money values are, you can work on living them out in your daily life. In other words, that means making sure that your behaviors with money match up with your beliefs about money.
So, let’s say early retirement is one of your long-term financial goals; specifically, you’d like to retire 15 years from now. Ask yourself what you need to do on a daily basis to reach that goal. It might mean finding ways to make more money or prioritizing debt payoff. Or it could be as simple as saying no to a night out with friends in order to save some cash.
When you consider how even seemingly small decisions might affect you financially, you’re living out your core money values. The more consistently you can do that, the easier it becomes to create the kind of financial life you want.
Tips for Aligning Your Values With Your Finances
Getting into some simple routines with your finances can make it easier to align them with your money values. Here are some of the best ways to make sure your financial values are reflected in how you manage your money:
• Make a monthly budget and and then stick to it
• Review your spending regularly
• Use credit cards responsibly by keeping balances low and paying in full whenever possible
• Start a regular savings plan
• Contribute to a retirement account if you’re not doing that already
• Choose investments that match up with your values
• Consider ways that you can reduce expenses and save money
• Surround yourself with people who have similar money values.
Communicating about money with your spouse or partner is another important step. If their financial values are different from yours, then talking things over can help you to avoid conflict. You may not be able to persuade them to accept your values or vice versa. However, you might be able to reach a compromise on how to manage your money that you’re both comfortable with.
FAQ
Can you be financially stable without money values?
It’s possible to be financially stable even if you aren’t aware that you have any money values. You can still make good decisions with money without realizing that values are driving those decisions. But having clear financial values to follow can help make stability easier to achieve.
What are bad money values?
Bad money values are values that lead to poor decisions with money. For example, someone who carries a large amount of credit card debt or relies on expensive payday loans to cover the bills may never have learned how to properly budget. Poor money values don’t have to be set in stone, however; it’s possible to turn them into positive financial values.
Do wealthy people have good financial values?
Just because someone is wealthy doesn’t automatically mean they have good financial values. A billionaire who runs a Ponzi scheme, for example, might have money values that tell them that it’s okay to defraud others for their own benefit. While having good money values can help you build wealth, you don’t need to be rich to make good financial decisions.
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Easy ways to save money
Saving money is important for a whole host of reasons.
For one, It can enable you to afford large expenses (such as a vacation or new flat-screen TV) without running up high-interest credit card debt.
For another, it can provide the peace of mind that comes with knowing you can get through a rough spot without hardship.
Having a financial cushion can also give you options, such as the ability to leave a job you dislike without waiting to get another one. And, it can help you to take the best possible care of yourself and your family.
Even if you feel you don’t earn enough to put anything away, having a well-organized budget can help you find ways to cover necessities, some fun, as well as a little bit of saving.
Saving money doesn’t have to feel hard, either. There are plenty of easy, fairly painless ways to build a simple savings plan–and you don’t have to do them all.
Here are some simple ways to save money each month.
Related: 7 fun ways to save money
Looking at your spending on a weekly basis can feel more manageable than trying to keep track of a month’s worth of spending at a time.
That’s not to say that you shouldn’t budget on a monthly basis, but breaking your timeline into smaller segments can simplify the process.
You can track spending (including every cash/debit/credit card transaction and every bill you pay) by using an app, jotting down every purchase or collecting all of your receipts and writing it all down later.
You might then set a certain day of the week to look over the week’s spending. This can be an enlightening exercise. Because spending can be so frictionless these days, many of us don’t have a real sense of how much we are actually spending on a day-to-day basis.
Just seeing it all laid out in black and white can immediately make you think twice before you buy something nonessential and inspire you to become more intentional with every dollar.
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Once you’ve mastered tracking your cash flow, and have a good idea as to your spending habits, you may want to take it one step further and set up a simple budget.
A budget is nothing more than setting limits for spending in different categories. To get started, you’ll want to list all of your monthly expenses, grouping them into categories, such as groceries, rent, utilities, clothing, etc.
If your goal is to save some money every month, you’re going to want to set a budget for yourself that includes an allocation to saving.
Next, you may want to tally up all of the income you’re taking home each month (after taxes), and see how your monthly spending and monthly income compare.
If spending (including putting some money towards savings) exceeds income, the next step is to look at all your expenses, find places where you can cut back, and then give yourself some spending parameters to stick to each week.
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If you do nothing else to get yourself on the savings path, consider doing this.
Automating savings is a great way to remove a huge barrier to saving — forgetting to put that money aside, then ultimately spending it.
The reality is, we all live busy lives and while we may have every intention of saving money, it often doesn’t happen without a plan.
Automating is an easy way to save money without ever having to think about it.
The idea is to have money moved from a checking account and into a savings account on the same day each month, perhaps soon after your paycheck is deposited.
This way, the money is whisked from the checking account before it can be spent elsewhere.
If you are new to automating or have an irregular income, it’s okay to start with smaller dollar amounts. Likely, you won’t even notice that the money is gone from your account, and you’ll be able to increase that amount over time.
You can set up automatic transfers to your savings, retirement, and other investing accounts.
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An easy way to save money on groceries is to make a meal plan and a shopping list before you go to the store.
Without a list, you may be tempted to buy things that look good but that you don’t need or can’t use. Plus, you may end up having to go back to the store later, where you may be tempted to buy more things.
You don’t have to be a pro at meal-planning. It can be as simple as picking a few recipes that you want to make throughout the week (making large enough portions to provide for leftovers is another way to save).
You can then write a list of the ingredients that you’ll need, making sure to check your cabinets and use what you have first.
You may also want to list exactly what snacks and/or desserts you plan to buy, so you’re not overly tempted once you get to the chips or cookies aisle.
Another way to save money on groceries is to cut back on pricier items, such as meat and alcohol, and to go with store or generic brands whenever possible.
Some of those recurring bills (such as cable, car insurance and cell phone) aren’t carved in stone.
Sometimes you can get a lower rate just by calling up and asking, particularly if the provider is in a competitive market.
Before calling, you may want to do a little research and know exactly what you are getting, how much you are paying, and what the competition is charging. You may also want to get competing quotes.
Even a small reduction in a monthly bill can save significant cash by the end of the year.
If you are experiencing hardship, you may also be able to negotiate down your electric and/or other utility bills by calling and explaining your circumstances. It never hurts to ask.
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This might sound more like spending than saving, but if you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going towards interest. Chipping away at the principal can feel like a tall mountain to climb.
If possible, consider putting more than the minimum payment towards your bill each month. The faster those credit cards are paid off, the faster you can reallocate money that was going out the window – and into interest – into savings.
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It can be all-too easy for money to leak out of your account due to sneaky subscriptions.
From unused gym memberships to shopping subscription programs to streaming services and cable television, subscription bills (even small ones) can rack up quickly because they come every single month without fail.
The first step is to cancel any of which no longer serve you. Try to be honest with yourself–are you likely to start going to the gym?
If you’re looking to save money faster, you might consider making a sacrifice on a subscription that you do enjoy. For example, maybe you pay for Netflix, Hulu and Disney+. Is it possible to use just one or two, instead of three?
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If you’re a reader and love books, one fun way to save money is to dig out your library card, or if you don’t have one, stop in to apply for a card.
The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums.
These days, you can typically get many of the benefits of being a card-holder without ever actually going to a branch. You can often get audio books and e-books, as well as access to online publications, all from your computer or phone. Cost: Zero.
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Buying well-made, durable items instead of cheap, trendy or single-use items may mean spending a little more up front.
But this can be a shrewd money move that can save you a bundle over the long run because you won’t have to repeatedly make the same purchases.
Buying a few classic, well-made pieces of clothing you will wear for a few years, for example, can end up costing less than picking up eight or ten cheaper, trendier items that you’ll end up replacing next year.
It may also pay off to spend a little more for appliances that are known for being reliable and lasting a long time and have great customer reviews, than buying the cheapest option.
Shopping for quality takes some education and practice, but it can be a worthwhile skill that your wallet will appreciate.
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Making impulse purchases can wreck a budget. That’s why if you’re tempted to buy an expensive item that is more of a “want” than a “need,” you may want to give yourself some breathing room, and allow the initial rush to wear off.
For example, you might tell yourself that you’ll wait 30 days and if, after the waiting period is over, you still want the item, you can get it then.
During that time you may lose interest in the item. If, however, you still want it in a month, that’s a good sign that this purchase will add substantial value to your life, and isn’t just a fleeting desire. If you can make room for purchase in your budget, then go for it.
This helps you make spending decisions from a slower, more thoughtful place, and can be a huge help in learning to budget and save money.
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Even if you’re only putting a small amount of money into savings each month, over time, that account will grow.
One way to help it grow faster is to park the money in a place where you won’t accidentally spend it, and where it can earn more interest than a typical savings account.
You might consider opening up a high interest savings account, money market account, online savings account, or a cash management account.
You may find that separating your savings, and watching it grow, keeps you motivated to save.
In some cases, you may be able to create “buckets” within your account, and even give them fun names, such as “Sushi Tour in Japan” or “My Dream House” that can help keep you motivated.
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Saving may not seem nearly as fun as spending, but it can give you the things you ultimately want, whether that’s financial security, a downpayment on a new home, or a comfortable retirement.
And, there are plenty of ways to save money that don’t require sacrifice. Sometimes, all it takes to get going is to become aware of your finances and spending habits.
You can then use a mix of short-term strategies (like spending less every time you go to the supermarket) and long-term moves (like paying down debt and buying higher quality goods).
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originally appeared on SoFi.comand was
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