The Freedom of Values-Based Financial Planning

What financial goals should you be focusing on at this stage in life? When the fateful day comes, how much money will you need to retire on? The figures thrown around by financial prognosticators can be downright intimidating. In our household, we are in a season of revisiting our financial goals. We are asking important questions that will shape our future, such as:

  • Do we really need a 7-figure nest egg to retire comfortably?
  • What do we do about the tension between desiring to live simply and generously, while at the same time finding enjoyment in life?
  • Should people sell out on their dreams today to be able to golf a lot in the future?
  • What purposes should our income be serving, anyway?

In our process, we have discovered that the wrong place to start is with a retirement target figure that an ‘expert’ has come up with. While that information will need to be factored into the information-gathering process, it is not the most important consideration. Why? Because our measurement of our financial success is not the values of the expert, but our values. It is possible to gain the whole world yet lose your soul. You may or may not retire rich, but you will certainly want to retire rich in terms of having made progress towards what matters most to you in life because values determine success.

For example, an immigrant couple that values the success of the next generation may never go on an expensive vacation, but they will do everything in their power to set up their children to prosper. A businessman may opt out of a vacation home so that he can change the destiny of many children who have no hope. A woman may choose to not take on an extra work contract so that she can devote more time to her marriage and family. You get the drift.

Photo credit: jDevaun.Photography /Foter / CC BY-ND

If you would like to clarify your values as a basis for your financial planning, identify your top 5 values from this list (taken from Bach’s “Smart Couples Finish Rich”):

  • Security
  • Freedom
  • Happiness
  • Peace of mind
  • Fun
  • Excitement
  • Power
  • Marriage
  • Friends
  • Making a difference
  • Spirituality
  • Independence
  • Growth
  • Creativity
  • Adventure
  • Fulfillment
  • Confidence
  • Balance
  • Love
  • Health

Your top 5 values form the basis of your financial planning. Take your list and compare it with your spouse’s list if you are married. From each of your top values, derive a financial goal that you will work on (including what help & information you will need, what your target date for completion is, and the steps you are taking to get there).

Doing values-based financial planning has helped me to realize that I may not need as much money as the experts say, but the reality is that many of our goals do in fact require money to make them happen. I have also realized that it is OK if my values do not align with that of others. It is freeing to focus on the way the God has wired you and the desires he has placed within you rather than trying to replicate the success of someone else. Finally, we are energized as a couple to focus on areas of shared values as we plan for our future. The first goals we identified were setting up our kids for college and taking an epic family adventure before our oldest son graduates.

Question: How about you? I’d be interested to hear in the comments section below how your top values are shaping your financial preparation for the future! You can leave a comment by clicking here.




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