Friday Financial – how values influence our decisions

This is the start of my financial learning series… now before you decide not to read any further, this is not going to be like a boring college lecture that drives you to fall asleep. Understanding basic financial principals will help us be more frugal. I don’t want this to be a one way conversation. I want to hear from you. How you apply these ideas into your life or how you have seen someone else do this successfully.

To start with, we’re going to talk about our personal values. Now values are different to everybody. It’s true, in some things my husband and I have different values. There are things we value more than the other. I personally would rather buy a kitchen gadget than a power tool (although I do use power tools). While he would rather it was the other way! Values are simply the relative worth, or importance of something (could even be an idea.) Our values are based/influenced on how we were raised and our our personality among other influences. Our values help us reach our goals.

For a simple exercise to help you realize your values, write down 5-10 things that are very important to you.  Here is an example list (you don’t have to rank them in order of importance):
– My Family
– Religion
–  Freedom
–  My life and health
–  Having my own residence
– Recreational activities
– Free time
– Education
– Security (personal, property, etc)
– Eating delicious food

He influences my financial decisions.

The items on our list influence how we spend our money. For example, I am more likely to spend money on my family and things they enjoy than on myself. I also donate money to my church, which I wouldn’t do if religion was not important to me. My husband and I tend to spend a bit of money on boardgames each year. We feel they are more of an investment because it helps us spend time together doing something we enjoy. Lastly, eating delicious food – I may spend a bit more on groceries than someone who enjoys eating a ‘starving college student diet’ consisting of mac and cheese or ramen noodles.  (I’m not saying that a college student has to eat those however.)

My husband has a co-worker who told him shortly after we bought our house that he couldn’t buy a house because he loved his ‘toys’ too much. He valued having his ‘toys’ over owning a house. His values are different than mine, and that’s okay. We make our decisions based on our values and desires.

These values are taken into account as we make our financial goals and start a budget (creating a financial plan).  Starting a new financial plan is a daunting task, and we’re going to break it up into pieces so it will be easy and not overwhelming. In fact if you don’t have a budget already, don’t write one today… simply track your expenditures for the next month (or longer if you wish.) This assignment is easy enough… just write down everything you spend for one month. Organize it however you want – after all it is YOURS and needs to fit YOU! A bit later we’ll be discussing typical categories that are in budgets and how to personalize it to you. For now just keep track of everything you spend, in whatever way works best (hint, it may not be a bad idea to keep receipts for the time period you are tracking just in case you need to reference it at a later date.)

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