Financial Life Focus

How to clearly navigate your financial life

Do You Know the Value of Your Values?

Hint: You can't consume your values.

What is the cost of a 42inch HDTV? What are the lease payments on that luxury car each month?  How about the cost of a European vacation? Yes, those who place a value on acquisition are dead-on aware of these costs.   It is clear that we understand the value of dollars in exchange for that which we wish to possess.  We can see how the cost fits in with our ability to pay; we do so willingly when that vacation, car, television reaches the “must” stage on our personal barometer of need.

 

There is a disconnect for many today in understanding the difference between a short-term want and our true core values.  When discussing with clients their hierarchy of needs, they begin the discussion with items such as exotic vacations, country clubs, luxury cars and lavish lifestyles. As we ask deeper, more intimate questions, we find out what is real or what they truly value:

  1. To be close to their children and grandchildren
  2. To be able to put their heads on the pillow at night and feel secure
  3. To know that they are properly provided for in their elder years
  4. To see that they can live a life that comes complete with meaning and purpose.

These are the value statements-the mission of meaning-statements beyond “things” to issues of love, security and purpose.  This is where our values reside; when the acquisition of 'things' become secondary or tertiary or might even slip into the realm of non-importance. 

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I stumbled onto the phrase “we know the value of money without knowing the value of our values” while attending a conference of Financial Life Planning.  Those attending understood immediately and nodded their agreement; it is the mission of  the Financial Life Planning community to help clients consider, confront and find comfort within the grasp of their personal values.  After all, without that understanding, how can a true financial plan be created?  A plan based on numbers, assumptions, wants, returns, cash flows, tax assumptions and other factors that might or might not occur become a wasteful use of time and resources.

 

Our personal values must drive the plan; the bedrock MUSTS that without inclusion, renders the plan meaningless.  For example, ten years ago, a client who was preparing for retirement met with me to discuss their retirement plans.  They explained their “dream house” on the South Carolina shore; they had the details of the house firmly embedded in their minds, right down the knocker on the front door.  They were determined to move from their home in New Jersey to their imagined Nirvana south of the Mason-Dixon line. 

 

I asked them about their children and what their expectations were in terms of seeing them.  They felt sure that their kids would visit and of course when grandchildren arrived, their palace in the Carolina’s would be a second home.  Off they went to build their dream home.  Within six months, they found out their daughter was pregnant and six months after that, he was diagnosed with early onset Alzheimer’s.  They lived in their home for less than a year when it became evident that they needed to sell their home and be close to family.

 

John died this year, after a seven-year battle.  Jane lives in a condo half way between her son and his two children and her daughter with her two children.  She is reemerging into life after the terrible consequences of watching John die.  But she did it with her children and grandchildren tightly around her to provide their love and support.  The thought of houses in Carolina, a distant memory, supplanted by the lifeline of family and closeness and those familiar.

 

Our values emerge when the shadow of possessions are put in the background.  A strong example of this was right after Hurricane Sandy devastated parts of New Jersey and New York; many lost property and homes-but the focus was on their families and their health, not their possessions.  They clearly understood the value of their values.

Michael F. Kay, a Certified Financial Planner, practitioner and a CPA, is president of the firm Financial Life Focus.

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