What Do You Value?
Updated: Jul 15
The more I learn about people and money, the more I'm convinced that wealth is just a conduit for expressing our values. It's a transactional way of saying: "This is what is important to me." One of the best client interactions of my entire career was an introductory meeting I had with a young couple. They had already built a budget, purchased a home, were consistently saving for retirement, but had contacted me because they wanted to know what came next. Their question was something like: "We want to take the next step and invest – how do we do that?" To which my answer was, "It depends on what you are investing for."
At first, this question stumped them. They were investing because it felt like the right next step, even if they weren't sure why. They're not alone. Over the years, I've met all kinds of individuals interested in opening a brokerage account for the sake of having a brokerage account. For some, it really is just to have more money. There is a sense of safety that comes with being able to point to an account balance and know that it's there for you if and when you need it. Still, the question remains – "what is it ultimately for?" You can't take those funds with you when you die. And if you don't know what you're saving for, the answer might be that the money is there for someone else to one day inherit.
As the young couple and I continued our conversation, I offered a few starting points for them to consider. What did they care about? Was education important to them? Did they want to help their kids pay for college someday? What did they do for a living? Were they entrepreneurial, and did they want to save for starting a small business in the future? Did they value generosity, and would it make sense to set aside money for future charitable ventures?
The more we talked, the more excited they got. When it became clear that the goal of accumulating funds in a brokerage account wasn't merely to check a box and fall asleep that night feeling like responsible adults, the conversation really started to roll. They began dreaming about what their future might look like. I left them with the task of sitting down together and sharing their values and hopes with one another and brainstorming what their savings might help them accomplish.
Before you jump into the technicalities of investing your own funds, the very first thing you should do is consider your goals. How you invest should be driven by what it is you're trying to achieve. If you plan to use the funds to purchase a home in the next few years, your portfolio should look drastically different from one with the goal of funding your retirement in thirty years. This is why financial planning is so important. It gives you an outline of your current situation and a roadmap for what you're trying to accomplish. This "financial story" will provide you with a much better idea of what kind of returns you may need, which in turn informs what level of risk your situation can handle.
Of course, before you can even plan for your goals, you need to know what your goals are. It may come as a surprise to you, but these goals aren't always obvious. My meeting with the aforementioned young couple is not an exceptional event. I've met with many individuals who are so preoccupied with the logistics of investing that they haven't given much thought to what it is they hope to accomplish with their lives and their wealth.
One of the most fundamental values for pretty much everyone is financial security. At the root of many nagging financial questions is really just one big, albeit simple question: "Will I be okay?" The balance of our savings account matters in so much as it's able to provide for our needs and satisfy our wants. And that's what personal finance is all about. It's discovering ways to make the most of that balance so that we can make the most of our lives. Unsurprisingly, this is also the starting place for most financial plans. In its most basic form, a financial plan is simply a document or spreadsheet that matches your assets and incomes streams with your needs. It helps you understand if you have or will have enough saved to provide for your living expenses and additional goals.
Once we know that we'll be okay and that we have enough saved to "be okay" we can start to move beyond our basic needs such as expenses for food, shelter, and transportation, and start to consider our wants. Unlike needs, our wants are pretty variable. Some people want to travel, and that becomes a savings goal. Others want to remodel a section of their home or save for a son or daughter's wedding expenses. Still, others may want to start a hobby, buy a vacation home, or purchase a fancy new car. When we give ourselves a chance to brainstorm, many different goals begin to present themselves, informed entirely by what we hope to value with our money. At the root of these savings goals is how we desire to spend our resources to further what's important to us. We may value seeing diverse landscapes and broadening our perspectives, or we may value family and relationships with those close to us.
What I love about formulating goals as a financial exercise is that it helps us better understand what we value and how we want to live. Not only does goal setting provide direction for our financial plans, but it also helps bring clarity to the direction we want to take our lives. I have had the pleasure of seeing clients new and old who have left a simple plan review with a newly minted enthusiasm for the life they've laid out for themselves, and as a financial advisor I believe it's one of the best things you can do for yourself and your wealth.