However, money is emotional. That is a fact—not a theory or philosophical musing. We spend and save based on our values and needs—of which our needs are decisions generally based on emotions. For example, you need food and shelter, but you prefer to spend your money on better food (preferring perhaps fine dining over fast food) or a nicer home (preferring the perfect move-in rather than the fixer-upper). You can even choose to rent a house or cook at home. Either way, it’s emotion spilling into things you want more than you need. And that’s okay.
Have you heard of a situation where a child was written out of a will or a distant relative was written in? That decision was based on emotion even when we think it’s a practical decision. For example, Suzy was always better at money than her brother, who drank too much and was never deemed successful in the eyes of the parents. Therefore, her parents chose to leave her everything in their will. That might be based on pragmatic decision, but it is covered in emotions whether admitted or not. And that’s okay, too.
Values are established by experiences in life and influenced by the people in one’s life, both past and present. Values experienced in childhood will usually stay with you in adulthood. Did someone you know live through the Depression? What were their money values like? Values are the underlying foundation by which we live and base our decisions and is strongly tied to emotion. The fact that money is emotional is not good or bad. It is just a fact and one that should be acknowledged to better your relationship with it.
Try This 5-Minute Exercise
How well do you know yourself and your values with money? Do you really know what they are? Have you and your significant other ever fought about money? Have you ever really thought about the reasons that drive you to live the way that you do? Do you like it? Is there anything you want to change? Let’s start by knowing your values and find out why.
Take a moment to take this brief online assessment at Nerd Wallet Money Quiz. It will give you results ranking your importance in four categories (Worship, Avoidance, Vigilance and Status) and will give you a bulleted synopsis in your thoughts behind money and spending. It’s a little like a money horoscope and could be exactly what you expected or maybe a little surprising. At the very least it will give you a starting guide on understanding how you make money decisions and how to build a financial plan that best aligns with you. By the way, this exercise is a judgement-free zone. No apologies. It is also confidential unless you want to share it with someone. It’s important that you feel that you have a safe environment to look at who you are. If your married, ask your partner to do the same and compare notes.
Move forward with confidence
Once you determine what drives you and if there are any changes you want to make, it’s time to create or reassess your goals and direction for the future and how your money ties into it all, particularly if you don’t like what you currently see. The beauty of life is that we have choices. Your fate might be pre-determined, but at every juncture, you have a choice to make to get to your ultimate destination. Also, please realize that each path is an opportunity to learn. Some lessons are more painful than others. Some are just fun. Each is an opportunity to learn more about yourself. Life is all about cycles. There is a beginning and an end to everything. So, don’t be harsh on yourself for feeling like you’re starting all over. As Alan Alda once said after reacting to his diagnosis with Parkinson’s disease, “The secret to life is [to] adapt, adjust, revise, because the only thing you can be sure of is that everything is going to change.”
Finally, you can start creating a more solid financial plan. This is the map that will guide you to your ultimate destination. There are so many intricacies involved in creating and managing a financial plan. For those who have the time to keep up with implications of new tax laws and changes to each investment, that’s great. However, people hire experts like plumbers, electricians, accountants, lawyers, doctors, etc. so that they do not have to be the expert on everything. Of course, the more money you have, the more complicated things become. So, hiring the right financial advisor is not only important but arguably necessary. You need one that resonates with you … not just the company or a firm but the individual with whom you will regularly interact. This person or team will be directly responsible for managing your financial plan so that it stays in step with your values and dreams—especially as you hit unexpected changes/barriers/bumps while on your destination road—which inevitably happens. So, emotions and money are good. Now, you need to, or you need to find someone to, help you dovetail both towards your success. And when you do, as the Dr. Seuss books says, “Oh! The Places You’ll Go!”
Rosalynn Harvey Heth, MPA, CEPS is president and COO of Preserve Wealth Management, a boutique registered investment advisory firm that specializes in getting families to and through retirement. PWM’s 5-step process begins with a deep dive Discovery Meeting. The result is a one-page financial plan with a value statement for you and your family’s money. To learn more, click here.