What Are Values, and Why Are They Important?
Why do you do what you do? What motivates you? Why is it important to plan for the future? What are you planning for and why? These are just some of the questions I start asking myself when I begin thinking about my goals and my future. Figuring out my goals isn’t very important if I don’t know why they are my goals in the first place.
These are questions we often don’t ask ourselves when we’re rushing around to keep up with the day-to-day. But the answers to these questions are quite important, and we need to know our own personal answers by heart. The key to answering your own questions fully and effectively is to identify your values.
Values are principles, standards, or qualities you consider worthwhile or desirable. Values will vary greatly from person to person because they depend on your personal judgment. What principles, standards, or qualities do you consider worthwhile or desirable? In other words, what are your personal values?
If you cannot answer this question confidently, you may want to continue reading. Knowing your personal values is extremely important because those values shape everything about you. Your relationships, behavior, choices, and personal identity are all affected by your values. Even if you cannot name all your values, they are still influencing every aspect of your life.
However, we are easily distracted – especially with all of the busyness and media in our lives today. It’s far too easy to get sidetracked and led away from your values. This is why it’s vitally important to know your personal values. Those values are your compass for the day to day decisions you must continually make, and they help draw the map of your entire life.
The Role of Values in Personal Finance
Now why would I be discussing values on a personal finance website? Isn’t that more of a personal development topic? Well, yes – it is. But the truth is that your values will have an impact on your financial decisions. There is no use in looking at numbers, giving you advice, or talking about investments until you can list your personal values. That would be like going on a great journey to some unknown land without a compass or any sense of direction. How will you know you got to the place you wanted to arrive?
For a lot of people, including myself, retirement is a goal. The question I ask is: Why? Why do I want to retire? Well, I know someday I won’t be able to work because I’ll be older and my health could be declining. I don’t want to be a burden on my future family, so I want to plan ahead for retirement. I also would like a time of rest from paid work, when I no longer have to work for money. That’s not to say I won’t be working. On the contrary, I may spend a lot of time volunteering or working for charities. Which gets into another important question. What am I going to do when I retire? And why do I need to wait until retirement to do those things? The answers to all of these questions are somehow tied to my values.
As I mentioned above, your values shape everything about you. Your values affect your behavior and choices. Your behavior and choices affect your personal finances. Therefore, you must recognize and understand your values before you can really start to work on your personal finances.
For example, let’s say you want to start using a budget to track your spending and find ways to save money. If your values include frugality, thrift, and organization, then this will probably be an easy goal. But if your top values include extravagance and liberation, you’re probably going to run into some problems trying to stick to a budget.
So before you spend any more time reading about personal finance, take a few minutes to identify your personal values. There are different ways to do this, but I’ll explain the method I’ve used. If this doesn’t work for you, then a quick Google search will provide you with other ways to accomplish the task.
If you are married, have a partner, or your finances somehow involve other people, then you may want to do this exercise with the other people involved. This will elicit an important discussion and ensure you are in agreement or at least at an understanding about your guiding principles.
Identify Your Values
To start this process, you will want to make sure you have time to focus. Sit down with some paper, and ask yourself this question: What is most important to me in life? Write down your values to answer this question. Try to make these one or two word phrases, and don’t worry about the order yet. I was able to get the major ones for me (Faith in God, Family, and Love) but I hit a road block trying to think of everything that’s actually important to me.
If you’re like me and are having trouble listing specific values, you can try using Steve Pavlina’s list of values as a starting point. Go through this list and write down the values that you feel are most important. Try not to choose the values you think you should have, but choose the ones you find truly important in your life.
If you’d rather not write these down on paper, I have included a link to Steve Pavlina’s List of Values in a Microsoft Word Document so you can edit it in an electronic format. Feel free to add other values or put them in your own words.
Prioritize Your Values
Now try to narrow down this list by combining similar values into a single value (or two if you need to). You want to get this list down to no more than 10-15 values. Using the list of values mentioned above, I ended up with 59 on my list. I had a lot of paring down to do! I eliminated the overlapping values to get it down to the phrases I thought summed up that particular group the best. For example, I eliminated ‘Education’ and ‘Knowledge’ and used ‘Learning’ instead. It took me a while, but I got my list down to 13 values.
Then you need to prioritize your list of values. You can do this by listing your top value first, then your second highest value, and so on until you’ve prioritized your entire list. If you are having difficulty prioritizing this list, then you might want to try CNN Money’s “The Prioritizer” calculator. The Prioritizer allows you to list up to 15 items and then asks you a series of questions that forces you to choose between each possible pair of goals. Once you’re finished, the calculator will give you a list of your values in priority order according to your choices.
Examine Your Values
Now that you have your prioritized list of personal values, it’s time to examine these values closely. Are there any that you feel do not fit? Are there any you’d like to change? This can mean dropping a value, adding a value, or tweaking your priorities. Some of your financial goals may require changing your values or priorities, so feel free to reexamine this list at any time.
After examining my prioritized list, I decided to drop 3 of the values I had listed leaving me with 10. Here’s the list of my top ten values in order of importance:
Paul’s Top 10 Values
- Faith & Relationship with God
- Devotion to Family
- Compassion & Love
- Curiosity & Wonder
- Contentment & Simplicity
- Fun & Youthfulness
- Prudence & Wisdom
Evaluate How Your Values Should Affect Your Life
Finally, it’s time to consider how your specific list of values will affect your life. If these are the things that are most important to you in your life, how should they steer your decisions? You might feel like you’re not following your values very well at this point in your life, but you have the ability to change that right now.
With your list of values in hand, you can evaluate any decision with intelligence and confidence. You just have to ask yourself: What should I do in this situation if these are my guiding principles in life? Apply this method to every area of your life, and you’re sure to see your life becoming more aligned with your values. As your situation changes, you might need to revise your values. Adapting to changes in your life will be crucial to your success in accomplishing your goals.
Now that you have your list of personal values, you can proceed with evaluating and planning your personal finances. These values should help lead you in making the necessary decisions about your goals, priorities, necessities, and the things you’re willing to sacrifice. All of these are important in reaching a financial future that will ultimately make you happy and fulfilled.
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