We start this year by examining the underlying values that drive us in order to gather momentum for any behavioural changes that may be indicated.
In this way we advance our short-term goal for the year, which is to get our spending and financial dealings more aligned with the life of our dreams: spending wisely.
Dr Vitts’ life values model and quiz: www.smartaboutmoney.org/tools-resources/lifevalues-quiz provide a sound foundation for self-examination. One’s overall outlook on what is wealthy is also important.
For instance, some people see being wealthy as owning many expensive and top-of-the-line possessions, having luxurious experiences at will and having a high income. Others consider themselves wealthy when they can pay all bills on time and not have to worry about unwieldy debt. Still others would consider themselves wealthy if they can comfortably afford an above-average lifestyle while contributing to community development and charitable causes.
How do you feel about money? What does being wealthy mean to you? Imagine when you come to the end of your life, how will you look back on the stewardship of the money you handled during your lifetime? I ask that you pause here and specifically answer each question as extensively as possible.
Self-examination also involves assessing your current financial situation: How do you earn a living? How much do you earn? What are your expenses? How much do you save? What assets do you own? What are your debts? Do you give to charity; if so, how much? What are the risks to your earning capacity and of unforeseen expenses? What are the investment risks?
Going through this process helps to identify your needs versus your wants, and prevents you being unduly influenced by your neighbours, relatives, friends or co-workers. It sets the basis of developing a personal financial plan that meets and satisfies your specific life values. From where you are currently, some short-term, medium-term and long-term money goals should be starting to emerge.
There is then the need to set priorities amongst the goals. Most priorities may be set based on the specific review and better understanding of your life values. However, for those goals where it may be difficult to settle the priority, here is a recommended website that assists in narrowing down the ranking of the importance of your financial goals: http://cgi.money.cnn.com/tools/prioritize/
prioritize_101.jsp.
This calculator is presented by CNN Money and it assists you in ranking a number of options by asking you a series of questions. This is a versatile tool that can be used for better decision-making in other types of options.
If you have written nothing else so far, write your goals in their priorities in a prominent place. Each time you sit to review your finances, those goals should resonate with you. The day that your goals seem askew is the time to redo the process: your life values may have changed.
This process takes time and deep thought. The ultimate benefit is greater satisfaction with how you are spending your money and therefore with how you are spending your life, much deeper satisfaction. You can expect greater certainty about your finances as you would be more in control of your spending, excessive debt would be avoided and you will be on course to achieve your specific financial goals.
We are in uncertain economic times. Committing to making wiser money decisions for 2016 is virtually essential to your financial survival. Hopefully, you will take the time and care with this process that is necessary to place your personal financial planning in a very positive light henceforth.
Louise Fairsave is a personal financial management adviser, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek advice about their specific circumstances. This column is sponsored by the Barbados Workers’ Union Co-op Credit Union Ltd.
