Bucks: What’s Important About Money to You?

Carl Richards is a certified financial planner in Park City, Utah, and is the director of investor education at The BAM Alliance. His book, “The Behavior Gap,” was published this year. His sketches are archived on the Bucks blog.

What’s important about money to you?

This is an uncomfortable question because we aren’t used to thinking about money in those terms. But it’s one of my favorite questions to ask. Even before talking about goals or building a personal balance sheet, you might find it helpful to ask yourself this question.

While I’m not certain of the question’s origins, I first learned of it about a decade ago in a book by Bill Bachrach. It was about the importance of understanding your values when making important financial decisions. I’ve been using the question ever since.

The purpose of this question isn’t to think in terms of goals. It’s meant to go deeper than that, or to get at the reason why we have certain goals. The first answers people come up with are usually easy — things like security and freedom. But once we pause and really think, we can move even deeper still, or into what might be called the “why” of money. This question gets uncomfortable because it forces us to get really clear about our underlying reason for doing things. It also forces us to face some inconsistencies in our lives.

Let’s say the first thing you come up with when you ask yourself the question — what’s important about money — is indeed freedom or security. Then, the next question you should ask yourself is, “What’s so important to me about freedom and security?’” From there, keep asking questions until you get to until you get to the thing that is most important to you.

Here’s how it works.

My friend, who we’ll call Sara, was a hard-charging professional whose career required her to be super competitive. She was “type A” to the hilt and worked long hours. So when I talked to Sara and her husband and asked her this question, I was curious what she would say was most important. She said freedom.

When I asked her what freedom meant, she replied, “More time.”

So I said, “Okay, let’s pretend you’re there. Let’s say you have more time. What’s so important about being at that spot?”

With some emotion she said, “I just want the time to raise a child.”

Now don’t get caught up on what Sara said was the most important to her. Her values are just that. They’re hers. Your values may be completely different. The thing to keep in mind is that, like Sara, once you identify what’s most important to you, things get clearer.

The answers to a question like this give you a lens through which to view your financial decisions. And after you’ve identified what’s most important, you’ll have incredibly valuable information to help you make decisions that match your values.

In fact, it can make it easy to say no to things that can distract you from what’s most important. Like the self-help author Stephen Covey said, “It’s easy to say ‘no!’ when there’s a deeper ‘yes!’ burning inside.”

For Sara and her husband, her answer became that “deeper yes.” The same can be true for you. You just have to ask the question.

I’d love to know what’s most important to you. How has knowing the answer to that question changed your life?

Article source: http://bucks.blogs.nytimes.com/2013/04/29/whats-important-about-money-to-you/?partner=rss&emc=rss