Hey everyone, welcome back to the Money Leadership series! Last time, we established that sound financial behavior is about leadership. To manage your money well, you need to lead yourself. And to understand and apply smart financial habits in your life, you need to lead yourself first. Today, we are tackling Step 1 of the Money Behavior System: Discovering Your Money Values.
The Myth of Willpower
Have you ever set a budget goal and completely abandoned it a week later? Traditional finance tells you that you just need to try harder and be more disciplined. But goals are not the same as values.
A goal is a target, like "save $10,000 for a down payment on something special." A value is the underlying why—the deep belief, like "security" or "independence," that makes the goal meaningful. Goals are specific, measurable outcomes, while values are the core principles that guide your actions and financial decisions.
The Cost of Financial Dissonance
To effectively lead your personal economy, you must define what truly matters to you about money. Is it freedom, family security, independence, or generosity?
When your spending doesn't align with these deep-seated values, you experience "financial dissonance." This is the stress and anxiety you feel when your spending does not align with your values.
Consider the story of a former client. They were a thirty-something couple who said their highest value was starting a family and creating legacy wealth. However, a look at their actual spending revealed a different story: they had little savings, leased luxury cars, wore designer clothes, and ate out almost daily. Their behavior was in direct conflict with their stated values.
What's your story? As a financial leader, recognize when your actions are sabotaging your mission.
The "Follow the Money" Exercise
So, how do you uncover your authentic values and bridge this gap? It requires honest self-reflection. Here is a practical exercise to audit your personal economy:
- Analyze Your Spending: Review your recent bank and credit card statements. List the top five categories where you spend the most money. Monitoring your spending shows what you value most financially through your behavior.
- Ask the Big Question: Write down "What's important about money to you?" and list whatever comes to mind. Place a star next to your five most critical responses. These are your Money Values.
- Analyze Your Time: Review your calendar and look for patterns. Tracking your time shows what you value most through how you allocate it.
Are You Aligned?
Compare your lists. Does your spending and use of time actually align with what is important to you in life? For many, it does not. And this is a foundational problem that you must address. Unless you have unlimited resources and significant wealth, your behavior is taking you down a path that will ultimately lead to financial collapse.
You are the CEO of yourself. If you were a business, would you be profitable or heading for failure? A successful business relies on values to guide its strategic vision. Once you identify the gap between what you say you value and how you actually behave, you gain the power to realign your daily choices.
Is it time to stop just "buying things" and start funding what matters?
Behavioral financial wellness is about peace of mind, not accumulating "stuff."
Ted
www.tedmclyman.com
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