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Are You Practicing Values-Based Financial Planning?

How to Use Your Values to Guide Your Investments

Kathy Longo, CFP®, CAP®, CDFA Monday, 28 June 2021

Are You Practicing Values-Based Financial Planning?

When you think of your finances, your first thoughts probably aren’t about your core values. You’re more likely to be focused on the debt you are trying to tackle or the long-term goals you have for your money. Often, conversations about finances are more focused outwardly on things like interest rates, rather than inwardly on things like intrinsic values. At times,  it may even feel like the values that guide your life and the pursuit of money are at odds with each other, but that doesn’t have to be the case. 

With values-based financial planning, you can pursue your goals while staying true to yourself and the most important aspects of your life. Fortunately, it’s a fairly straightforward process, too. First, identify what matters most to you. Then, visualize your goals. Finally, determine a plan to reach those goals and get started implementing it.   

Identify Your Values 

To use values-based financial planning, you first need to understand what your own values are. What is the guiding force that drives you? Perhaps your main value is family, and you’re most concerned with the well-being and happiness of your spouse, children, and grandchildren. Maybe it’s education, service to your community, or a commitment to the planet and sustainability. 

Identifying your core values is a very personal process, and there isn’t one right answer. You may have one core value or several values that heavily influence your life. Once you understand what those are, you can start basing your financial planning on them. 

These values will guide your financial decisions, coming into play when decisions are difficult or murky. Measuring the competing options against your values should help bring the right choice into clear focus. 

You may also encounter situations where multiple values are involved. In these instances, a solid understanding of your goals will help you prioritize your values. What goals are most important to you? Will the choice before you help you realize one of those goals, or can you find a way to accomplish portions of multiple goals?    


SEE ALSO: Why You Need a Family Mission Statement


Use Your Values in Every Decision 

Supporting small businesses is a cause that resonates with many people, and it gained importance in the face of the global pandemic. Now, imagine that your core value is a commitment to improving your community. Because of that, you frequent locally owned small businesses, including a coffee shop, grocery store, and art gallery. You may know that the products and services are of a higher quality than you would get otherwise. You may end up paying more for some of these products because they don’t have the same economies of scale as their chain store competitors. 

Perhaps you don’t mind the extra cost because you know that your money is going right back into your community, and those decisions align with your core value. However, there may be times when you deem the extra cost is not equal to what is being provided. Those decisions can only be made by you with your core values to provide guidance.  

You can bring your values into action when making decisions about charitable giving. Maybe sustainability is another important value along with community improvement, so you choose to support organizations that also care about those values. For example, your city is planning some upgrades to the community parks. They plan to improve recycling facilities and implement more green infrastructure, but they need funding. You can choose to champion that cause or at least provide some financial support to help them in their efforts.

You can also get intentional when it comes to your investments through a strategy known as impact investing, which is an approach to investing that aims to generate specific beneficial social or environmental effects in addition to financial gains (also known as Environmental Social Governance or ESG investing, which is a popular topic among our clients here at Flourish). Finally, like all your other financial decisions, your estate plan can also promote your values. By specifying where you want your money to go, you can continue to further your goals, whatever they may be, even after death.      


SEE ALSO: Six Charitable Giving Insights to Help You Maximize Your Impact 


Develop and Implement Your Plan 

Once you are sure of your values, you can work with your financial advisor to seek out investments in companies that align with those values. You should also work with anyone else who oversees your money, including estate planning or wealth planning attorneys and tax advisors. 

Final Thoughts on Values-Based Financial Planning

If you want to do more with your money, start considering what is most important in your life - and commit those values to paper. Refer to them often, and particularly when financial decisions arise. How can your money work harder for you, accomplishing your financial goals while simultaneously improving the world around you? The key is to coordinate your efforts, being intentional in your daily spending and long-term investments. 

While identifying your values is an extremely personal process and can certainly be managed on your own, working with a financial advisor can help ensure that your financial plan reflects and promotes those values. At Flourish, we know that understanding your own values is key to achieving your financial and life goals. Check out this episode of the Flourish Financially Challenge podcast, Money & Your Values for more on discovering what is most meaningful to you.

About the Author

Kathy Longo, CFP®, CAP®, CDFA

Kathy Longo, CFP®, CAP®, CDFA

Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.

 

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