Financial worries are often cited as a major source of stress. For example, a 2021 study found that even before the pandemic and subsequent economic downturn, a majority of Americans said they felt stressed or anxious about their finances.1 Similarly, in 2022, research revealed that more than seven out of 10 financial planning clients experienced financial anxiety more than half the time.2
What causes financial stress? Lack of assets and/or income is certainly one reason. Another might be the flood of financial information Americans can access on a daily basis: reports about the markets, economy, and financial institutions, as well as conflicting advice about what people should and should not do with their money. One way to avoid becoming distracted and anxious amid scary headlines is by having a sturdy framework to help guide your spending, saving, and investment decisions.
The Why of It
In one of the most viewed TED Talks of all time, motivational speaker Simon Sinek identified what he calls “The Golden Circle,” which is actually a series of three concentric circles. He labels the extreme outside circle “What,” the middle circle “How,” and the core “Why.” He uses this image to illustrate how the most successful leaders and organizations are able to inspire so many people to support their causes or buy their products. Essentially, it’s not what they do or how they do it; it’s why they do it.
“By ‘why’ I don’t mean to make a profit,” Sinek explains. “That’s a result … By ‘why,’ I mean: What’s your purpose? What’s your cause? What’s your belief? Why does your organization exist? Why do you get out of bed in the morning?”3
Certified financial planner, author, and creator of The New York Times’ “The Sketch Guy” column, Carl Richards, says Sinek’s principle can also apply to an individual’s or family’s financial plan. Having a clear vision of why you earn a paycheck, save, invest, and spend your money is critical to avoiding distractions and questionable or rash financial decisions.4
Taking Stock of What Matters
The key to identifying your why is taking inventory of your most important values, many of which may have little or nothing to do with money. To do this, set aside some time when you’re feeling at ease and simply jot down what matters most to you. Some examples might include family, achievement, security, faith, knowledge, creativity, generosity, and independence. Try to narrow down your list to 10 or fewer.
Next, think about how your values relate to your financial situation. For example, if faith and generosity are high on your list, how might they influence your estate plan? Or if independence, creativity, and achievement make the final cut, how might those values affect your career choices? Perhaps family and knowledge are important — what might that indicate about your dreams for your children, from primary school to college and beyond?
Working with your financial professional, you can use this list of core values as a framework for your financial goals, strategies, and tactics. Whenever you’re tempted to make a decision that could derail your overall strategy — such as chasing the latest hot investment tip or taking a loan from your 401(k) plan — your core values can serve as an important guidepost and prevent you from making a costly mistake.
Your list can also help you make spending decisions. For example, if adventure and education are among your key values, taking your family on a trip to explore a new culture can bring intangible returns in the form of a lifetime of tolerance for differences as well as happy memories.
Adapting as Your Life Changes
A values-oriented financial plan is as personal and unique as each individual or family. It’s also flexible. As you progress through various stages of life, your hopes, desires, needs, and beliefs may change as well. Your financial professional can help you ensure your financial goals and strategies continue to reflect what matters most to you.
1) FINRA Investor Education Foundation and Global Financial Literacy Excellence Center, 2021
2) Financial Planning Association, 2022
3) TED. (2009, September). How great leaders inspire action/Simon Sinek [Video].
4) Morningstar’s The Long View podcast, “Carl Richards: It Should Be Ok to Relax Out Loud,” July 27, 2021
Tim Bartholomew is an Investment Representative with Greene Investment Services located at the Bank of Greene County. Please call 518-943-2600 ext. 2153 with your comments or questions. Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Greene Investment Services is a trade name of the Bank of Greene County. Infinex and the Bank of Greene County are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. Prepared by Broadridge Advisor Solutions Copyright 2023.