When it comes to your financial decisions, what is really influencing your choices? If you would be given 50.000kr, what would you do with them? Your answer will most likely be affected by your values and the things that are important to you. The values you identify will influence which way you set your sails to bring meaning to your financial life. In order to help with this and align both sets of values you could take into consideration answering the following 3 questions devised by George Kinder, CFP® from the Kinder Institute of Life Planning. They can be a bit out there but are great for helping you connect with your principles on a deeper level.
- Assume that you are financially secure and that you have enough money to meet your demands for the rest of your life. What would you do if you were in charge of your own life? Would you make any modifications? These are your dreams, don’t be hesitant to respond.
- Assume you go to the doctor and are told you only have five to ten years left to live. Fortunately, you will never become ill. You’ll also have no idea when your last day is. What will you do with the time you have left?
- Now consider the possibility that your doctor informs you that you only have one day left to live. Ask yourself, as you reflect on your life, all of your accomplishments as well as all of the things that will stay unfinished, “What did I miss? Who was it that I didn’t get to be? What did I miss out on?”
The answers are very personal and there is really no right or wrong to them, yet defining such answers will help you be confident that what you’re doing with your money is assisting you in achieving your goals and promoting the values that you want to promote. Your core values and principles are the first step to your financial planning.
So, how do we actually acquire these values? What is the process by which they become a part of us? Well really they evolve over time. The first place that we are probably influenced by is with our family and early stages in life. But as we grow up they can change since we start to meet new people, make new friends, etc; Our friends also start having an influence on our principles. When you give it a thought, the things in our environment, such as our own society and perhaps our spiritual beliefs, all play a role in our values. Then there’s media, which we can’t overlook in today’s environment. We’re always hearing stuff on various forms of media, and it’s frequently in advertising. Typically, we are told to continuously buy.
A survey conducted by Norstat AB (2020) found out that young adults in general highly value social life and what their peers think about them which in turn can lead to a pressure to buy more in order to feel part of the group. This in combination with targeted advertising on social media and payment solutions that make it easy to buy can end up creating dangerous consumption habits. Additionally, 52% of young adults in the age group 18–25 years-old in Sweden have difficulty making their money last and want to be better at managing their finances. Moreover, the total amount of debt referred for payment injunction to the Enforcement Authority (Kronofogden) in 2020 among 18- 25 years-old was over SEK 1.36 billion, a 27% increase since 2018.
All of these factors come into play, influencing our values and most likely our financial choices. As we get older and have more experience with spending, saving, and managing money, we build financial habits and attitudes, which influence our decisions. These habits and attitudes can be beneficial and efficient when they help us reach our goals, but they can also be detrimental when they hold us back. So it’s important to be aware of these habits and attitudes and to think about them consciously rather than not taking action.
