A common theme in personal finance advice is to align your spending with your values, but the advice that follows often focuses not on values at all, but on value — that is, what you value. Here’s how that might play out:
Get your spending in line with your values, and spend only on the things that truly add happiness to your life. If you love watching football more than anything, then spend shamelessly on your NFL Sunday Ticket, but if TV is just a distraction from the rest of life, then cut that cord and never spend another cent on cable. — Hypothetical personal finance expert
Which — don’t get me wrong — is GREAT advice. I wholeheartedly agree. But that’s about value, not values. (Does anyone say “football” when asked about their personal values?) And I think it’s worth talking about the values side of the discussion, too. So let’s do that.
What Do You Value? Vs. What Are Your Values?
If you’re on the financial independence path or you’re already FI, there’s approximately a 100 percent chance that you’ve already done the hard work of examining what you truly value in life. And that’s so important! Many people unknowingly make the mistake of spending money on things they don’t actually value, or that don’t add value to their lives, and doing so holds them back from freeing themselves of the requirement to work for money forever.
Not to mention that spending only on what you value often allows you to spend more, and to do so shamelessly, on the things, activities and people that you enjoy the most. That is wonderful!
For example, we love not having to shovel our whole, long driveway when it snows two feet at one time, like it’s supposed to do tomorrow. So it’s worth it to us to pay a snowplow service. And we love a good bowl of pho, and had a pho date yesterday (and will probably make pho tomorrow), which costs money that is, to us, money well spent.
But our values are not “outsourcing snow shoveling” and “eating pho.” Those are things we value, sure, but our values are bigger.
Our values are focused on fairness and equality, and the ability of everyone to live a great life, not just those who can do it at the expense of others. Our values are what make us committed environmentalists who believe in not using more than our fair share of the planet’s resources at the expense of future generations and other species we share the planet with.
Our values aren’t at all original, but they don’t have to be. All that matters is that they reflect deeply what we believe and care most about. That’s true for your values, too.
Is Your Spending Aligned to Your Values?
This isn’t necessarily an easy question to answer.
I’ve written before about the responsibility those of us who are financially independent have to give charitably — not just of our time, but of our money, too. Other than linking to that post, I’m not going to focus on that. This isn’t about charitable spending, but about routine spending.
The research is clear that the people who live the longest and are the happiest and most fulfilled in retirement are those who live with purpose. And what better purpose than to live your values, a big component of which is spending according to your values!
Shopping local is a great example of spending according to personal values as opposed to what you value. Because while you might value the altruistic feeling from giving your money to a local business instead of to a global megacorp, you are also likely spending a little more to buy from Mom and Pop Corner Store than from a massive discounter online. That’s values spending all the way.
Same goes for choosing one store over another for reasons that don’t have to do with price, like how I’d rather shop at Costco, which consistently gets the highest marks for worker satisfaction and offers solid benefits, than at Sam’s Club, which doesn’t. (And admittedly, we shop at neither, because don’t get Mark started on what happens when you give people giant shopping carts, free samples and sensory overload.)
Choosing not to buy cheaply made crap is a great example of a place where value and values can overlap — you know you’d have to replace that thing at some point anyway, so you’re not getting great value out of it, but you’re also refusing to waste resources on something disposable, which is more values spending.
Take a look at how and where you spend your money, and ask yourself whether you’re leaning more toward value, more toward values or find yourself somewhere in the middle.
Putting People Before Money
We’ve made some financial choices in the interest of helping people we care about that are not exactly monetarily optimal. We made a fairly substantial personal loan to a relative to help clear some relative debt, despite the advice of experts who advise never to do such a thing, and in fact to many readers here who warned us against it. I’m thrilled to say that it’s worked out perfectly well so far, even though we would have made more money investing in the markets than we’ve made off of loan interest.
We also bought a rental property that was not part of our plan to rent to a different relative, and we based the property choice far more on that person’s needs than on what our cash flow from it would look like. That’s working out perfectly well, too, though again, we would have done better on the money side investing in the markets instead.
We’re happy with both of those decisions because they align to our values, and that overrides the desire to grow our investments. (Not that they are bad investments, they are just suboptimal investments.)
One of our core values is that people are more important than money, and while that doesn’t mean that we’re out here giving all our money away, it means that we’re willing to make some suboptimal financial decisions in service of that.
Because, truly, what good is having money if you can’t use it to help people you love or to support your own personal values?
Using Your Spending Power for Good
The power that each of us has as consumers and spenders in the economy is no secret. Boycotts have a long and colorful history, and have been successful countless times in getting companies to change their policies. And consumers voting with their dollars have made successes of social impact companies even if they didn’t necessarily provide the best value out there in absolute terms. See TOMS shoes, for example, which are not the best or most durable shoes, nor the best priced shoes. But they give a pair of shoes to someone in the developing world for every pair of shoes purchased, and that’s built them a loyal following of people willing to pay more to support their mission.
So thinking of your dollars as votes — just as Your Money Or Your Life taught us to see money as a representation of our life force — is another important way to align your spending not just to what you value, but to your values.
And that means thinking not just about where you shop and what you purchase or don’t purchase, but about your spending power writ large. For many of us, that means taking a look at where our investments live, as they are our largest asset and greatest power for leverage.
It might be pushing your company to offer a socially responsible investing option in your 401(k). It might be asking your investment brokerage why they refuse to pressure assault rifle makers to change their business and marketing practices, for example, when that brokerage is the second largest shareholder in the gun makers, and when 70 percent of the American public supports commonsense gun regulations. (It might also be signing a petition to show how many customers care deeply about this.) It might be pressing a company whose stock you own to treat its employees better or to adopt more responsible environmental practices. It could be anything, really.
Whatever causes speak most to your personal values, it’s worth thinking about how you can use the power of your assets or spending to make your voice heard, or to give voice to the needs and concerns of those who don’t have the same power you do.
How Do You Align Your Spending To Your Values?
We’d love to know — do your values come into play in your spending decisions, and if so, how? Or do you focus more on value? There’s no shame in that, of course, and often the best way to get on the FI path is to focus first on value, and then as you become more financially independent, to shift more toward values. (But there’s also no reason why you have to wait to become FI to focus on values.) Let’s chat about it in the comments!