Early in my career, I learned a very valuable approach to helping clients identify their views on money — which impact how they make financial decisions. Some call this one’s “money story.”
This approach has led to fruitful conversations about my client’s relationship with money, what they want their money to do for them and why. For some, it also helps them craft a new money story, so they can make different choices going forward.
The great news is that you can also use this approach as well. Try working through the steps below with a blank piece of paper and a pen, or talk through it with your partner, a trusted friend, or your financial advisor.
Step 1: Identify the key value
Bill Bachrach, the “father” of values-based financial planning, taught advisors to first ask “What’s important about money to you?” Clients often start with answers like security, helping people, taking care of family, freedom. Ask yourself this very question and write down your answer.
Once you have that first idea, get specific about what that means to you. Think about how you would (or do) live out that value.
For example, if you said taking care of family, does that include just your children or also your parents or siblings? How would you take care of them? Perhaps you mean paying for an education, having them live with you, paying for family trips. One person’s “taking care of family” might look very different from another’s.
If you said freedom, what kind of freedom? As you dig deeper, you may find you mean freedom to travel or freedom from others’ influence — two very different things.
If you said security, you might value having a large safety net in the bank. Maybe this means you never worry about paying for home repairs or kids’ activities. Maybe it gives you the confidence to take some career risks, knowing that a setback won’t break the bank.
Step 2: Find the value’s origins
Once you identify your key value, reflect on why it is important to you. Often our feelings and values around money trace back to childhood experiences or a defining moment in life. Try to get to the root cause or influence that led you to hold that value.
For example, if your answer to that first question is security, you may trace that back to a childhood where money was tight. Perhaps seeing your parents deferring bills to put food on the table created a constant level of stress that you are keen to avoid.
On the flip side, perhaps someone with plenty of money was routinely criticized for how they use it, and they might feel shame about their money. That shame might lead them to try to get rid of their money — possibly in unhealthy ways like gambling or giving away so much that they can’t meet their own needs.
Digging deeper into your feelings about and history with money can be enlightening and empowering.
Step 3: Rewrite your story, if needed
Our relationship with money can evolve. Often that happens because of life experiences, but you can make it happen more intentionally too. You can rewrite your money story.
Sometimes people get stuck in a bad loop with money. But past behaviors don’t always need to carry into the future. Identifying the root causes may make it easier to change them.
If your relationship with money isn’t what you want it to be, do step 1 again but think about the values you want to have instead of the ones you currently have.
Step 4: Live your values
Money is just an inert object until you do something with it. Think about how you can live your values throughout the different financial situations you are likely to encounter in life. Set specific goals to spend your money to support your values.
For example, if you value helping others, your goals might be donating a certain percentage of your salary to charity, hiring out work like housecleaning to give you time to volunteer, or eventually include a charity in your estate plan.
Some common goals that we can help you work toward include retiring young, traveling often, supporting a child’s higher education, making a difference in the world, helping a family member, learning new things, or buying a family vacation property.
Understanding what is important to you and why it is can help identify the goals that are right for you. Writing your money story may help you use your money to live a more enriching and fulfilling life.
Anne is a Senior Wealth Manager and Shareholder. She is passionate about simplifying complex issues and is a huge advocate for clients as they work through personal money questions and work toward financial life goals.