Six Steps To Better Financial Decisions

Money is easier to spend than ever.  Unintended consequences of financial decisions have more impact than ever.  Financial conversations are more complex than ever. Creating a Statement of Financial Purpose will provide you with a framework for conversations and commitments. What do you value and what is meaningful to you and how do you align them with your credit card purchase or what comes out of your wallet?

The benefits of re-connecting with or clarifying your values and using money as a reflection of what is important in life include releasing FOMO and what the outside world tells us we “should” look like or be., You will create better physical, mental and relational health as you leave financial stress behind.  It provides clarity and connection, continuity and confidence as we use our money intentionally instead of haphazardly.

There are six steps in creating a Statement of Financial Purpose:

Step One – Find a list of values.  Here are a couple of on-line resources:  jamesclear.com/core-values; lifevaluesinventory.org.  You can purchase a deck of values card to work through at Think2perform.com or coachingtoysstore.com/values.  Print out the list or shuffle the cards.  Create a space, take a deep breath, and spend some time with them.

Step Two – Write down the values that you most resonate with.  These may be different for family members.  There is no right or wrong.  Some will overlap and some will be divergent  It is important to be respectful and accepting as to what is on someone else’s list.  More than likely, there will be many that overlap or are very similar.

Step three – Pick the five most important values.  If you are working as a couple, write down all ten of them.

Step four –  Rank them in order of importance and write them down.  As a couple, rank the values you that were the same on each of your list, then separately, rank the ones that were different.

Step Five –  Answer these questions:

*How do I (we) want these values to be reflected in my (our) financial decisions?

Step Six –  Craft your joint and/or individual Statement of Financial Purpose by filling in the blanks

“The purpose of money in my/our life is ______________.  Three ways I/we will bring this purpose to fruition are ___, ___, ___.

As you move through seasons of life, your values may evolve, and financial purpose will change.  Here are two examples.  One as a younger person and one as someone in their fall season:

The purpose of money in my life is to provide for my needs, to create opportunities for adventure and to create security for my future.

Three ways I will use my money to fulfill these purposes are:

  1. Review my credit and debit statements to see where my money went and make course corrections.
  2. Plan and save for the trip to Patagonia next May.
  3. Start participating in my employer’s retirement plan.

The purpose of money in my life is to optimize connection with people most important to me, to serve the greater good of my community and to seek personal growth opportunities.

Three ways I will use my money to fulfill these purposes are:

  1. Organize and finance a family gathering.
  2. Volunteer my time and contribute financially to a community cause that is important to me.
  3. Hire a life, retirement, or transition coach.

Yes, this takes time and effort, and it is worth it!  A Statement of Financial Purpose will create authenticity and integrity in your financial life. It will give you a structure to live in alignment with what is truly important in your life. The challenge will be in the nuances of the numbers.  What is available to you and how maximize the opportunities for fulfilling the purposes? This is where a financial life planner, CFP ® or financial strategist can add value to your journey.  Once you connect with your values or utilize a professional to walk you through the process, drilling down on tools, techniques or temperaments will move you toward your unique version of true wealth and prosperity.

We have abdicated our financial resolve and given away our financial agency to the media and marketing. It is time to reclaim your financial power and prowess.  The Statement of Financial Purpose is a great place to start.

Share this episode