THE FISCAL BLUE PRINT
WITH COACH JEFF MONTGOMERY
Episode 36: Smart Women, Smart Wealth (Part 2) Putting Your Money Where Your Values Are
Today we are continuing our 4-part series on Women and Wealth by climbing the Values ladder! What does that mean? We believe living a life in alignment with your values may be the most important ingredient in creating peace of mind, Joy, and happiness not only in retirement but throughout your working years as well.
There are many ways to gain clarity of your core values and today we are going to do a neat little exercise called THE VALUES LADDER.
Disclaimer: Please do not take advice from me on this show. As a licensed Fiduciary I am only allowed to give advice to clients. So, unless you are a client, I cannot give you advice because I don’t know you. So, think of this as helpful hints and education only. And please before implementing any information or ideas you hear on this show always consult your legal adviser, your tax adviser, and your financial adviser.
(1:00) On last week’s podcast, we set up our discussion for this 4-part series by examining the good news surrounding women and wealth and the not so good news! We mentioned that there is a lot of good news and that women are an absolute economic powerhouse today.
However, we also had to talk about the unique challenges women face regarding retirement planning that somewhat differ than the challenges of men.
- Living longer
- Financially damaged in divorce
- Out of the work an average of 11 ½- lower SS, lower pension
- Aging parents
In this episode, we are going to talk about building a retirement and income plan to address those unique challenges AND we are going to start to build this plan by focusing on (what I think is the most important aspect of planning) and that is VALUES. More specifically identifying your core values and making sure your plan is in alignment with those values.
Last week I mentioned teaching clients “How to live Rich” and that doesn’t necessarily mean money ……….it means VALUES. Our saying in the office is “It’s not about the money it’s about your life!” What we are about to do is probably the most important thing you can do to manage your money in retirement, fortunately, it is also the easiest…
(4:50) “IT’S CALLED PUTTING YOUR MONEY WHERE YOUR VALUES ARE”
- Talking about values is not the first thing that typically comes to mind when it comes to your finances.
- Instead, I think most FA’s typically talk about returns. But when you think about it, money is not an end in itself. It’s a tool to help us achieve some particular goal. If the way we handle our money conflicts with our values, we are not going to wind up living happy and fulfilled lives.
- David calls this in his book “Purposed Focused Financial Planning” –it’s the critical idea that your financial plan should be built of your core values – that which is most important to you. When your values are clear, your retirement plan becomes meaningful, more fun, and most importantly your financial decisions become easier.
(6:10) So, let’s start this exercise by asking a simple question, “what’s important about money to you?”
- The answers usually fall into two categories: goals and values.
- Goals are tangible. They are usually related to specific things or experiences and have a specific monetary value. Paying down debt, buying a house, traveling, starting a business, and redecorating are examples of goals you might have.
- Values are intangible desires — the things in life that you care most about. They’re about who you are. Things such as making a difference, freedom, independence, spirituality, and happiness, are all examples of values.
- A goal might help you toward fulfilling a value. For example, travel is a goal, but the reason you like to travel maybe because it gives you a sense of freedom or happiness, which are values.
- What we want to focus on our values because they make the greatest differences in your life. If you can clarify this, it will help you make some financial decisions. If you realize, for example, that being financially confident or making a difference in the world are values for you, it will be much more powerful than simply fulfilling a goal like going to Hawaii or buying a new car. It just means a lot more.
- That meaning will be much more motivating in helping you to take whatever action you need to, in order to live that value. You’ll be living a richer, more fulfilled life by using your money for your values—for what’s important to you. If you can clarify your values, your goals will naturally follow, and you’ll be much more likely to make them happen.
(10:00) Coachable Segment:
- Let’s go look at how you identify your values. The truth is this is easy, and if you have a partner in your life, helping him or her do this as well can be life-changing.
- Now we’re going to help you clarify your top values by building what we call a values ladder.
- The easiest way to learn how to do this is to take an actual example. This was done by David Bach for a real person, Helen. Helen was a 72-year-old woman who was a child of PARENTS THAT LIVED THROUGH the Great Depression, and as a result, was always taught to watch her spending and savings carefully.
- Her husband passed away six years earlier and she had been living on Social Security and a widow’s pension. In addition, she had about $700,000 in CDs that at the time had been paying her 5%, or $35,000. (Obviously, this is an old story, Well Over 20 years ago since rates are nowhere near that)
- This was money she was not using to live, she just kept putting the interest in a savings account. When he went through the Values Ladder exercise with Helen, it started by asking her “what’s important about money to her? – what’s the purpose of this money?”
- These questions –“What is important? Why is it important” – are the same two questions that we’ll continue to ask as we work our way up the ladder.
- In Helen’s case, when David asked her what was important about money to her, what was the purpose –her answer was “security.” But security means different things to different people.
- So, David asked, “What’s important about security to you?” For Helen, it meant she wanted to know that she would always be financially independent.
- But what’s important about being financially independent? In Helen’s case, it was important because she wanted to be sure that she would never be a burden on her family. Her children and grandchildren meant the world to her, and she would never want to “take” from her family…she would like to be able to “give” to them.
- And what’s important about giving to them? What would that mean? Helen’s eyes lit up when asked this question, and she said that she had always dreamed of taking the whole family on a cruise to Alaska. To her, that would be an ideal way to enjoy life, retirement along with her family right now … which became the final rung on her Values Ladder.
- When he asked her why she wasn’t taking the steps to make her dream come true, and just booking the vacation, she said it was too expensive … at least $15,000. I just don’t think I can afford it. We asked her how many years had she had this dream? She said at least five. But we then pointed out to her that for the past six years since her husband died, she had been earning two and half times what the cruise could cost a year and not even using it.
- The money was sitting in a checking account earning next to nothing. Her “Depression Child” mentality was preventing her from enjoying her money and her life now. When she really thought about her Values Ladder, about what was important to her in life, she decided to go ahead and take her family on vacation. In Helen’s case, the Values Ladder exercise helped her use her money in the way it was supposed to be used –to make her life better.
- One thing David asked Helen was, had her advisor at her bank ever called her to discuss any of her plans? She said my advisor at my bank. I haven’t talked to the “guy at my bank” in six years.
- The reason values matter is that they are your values. Everyone’s situation is different, but the important thing to remember is that your money should be used to make your values real.
“We appreciate you joining us today for this episode of The Fiscal Blueprint.
Remember it’s not about the money but about your life!
Having a mindset and living a life of abundance rather than scarcity will change the direction of your life forever!! Enjoy the Journey!!!
“Opinions voiced in this recording are for general information only and not intended to offer specific advice or recommendations to any individual. All performance references are historical and no guarantee of future results. All indices are unmanaged and not available for direct investment.”