Some of my clients have come to me because they know they are not saving enough for the future but don’t seem to be able to change their behavior. These are smart, competent, well educated people who certainly understand their situation on an intellectually level, so why haven’t they been able to change their spending patterns.
The answer is they have deep seated money values that they may not be fully conscious of that are preventing them form changing. Until they acknowledge these values, and understand them it will be difficult for them to change.
What is a money value?
A money value is an association or meaning that money acquires which usually develops during childhood. For example, for many people who were children during the great depression when money was short, money may mean security. Money could also be the means to purchase status through a certain lifestyle (house, car, travel, boat, etc.). This is the money value that is subtly pushed in advertising. “You will have fantastic life if you purchase our product because it will make/give you, (higher status, a better parent, thinner, healthier, sexier, admired, envied, etc. etc.)”
How do money values affect us?
They motivate us at a very deep level and may engender feelings that we feel ashamed of if brought into the open. Example: a person buys a car she can’t afford to impress her neighbors (AND HERSELF!) that she is a successful happy person. In our society there is a particularly strong association between spending, perceived wealth, and high status. (I own a Mercedes therefore I am wealthy, I am wealthy and therefore I am high status). We adopt this value unknowingly and let it guide our spending decisions even if we would have made different decisions our status wasn’t at stake (e.g invest the money and drive an old car). The internalization of these values can often lead us astray holding on to a lifestyle we can’t afford and may not have ever really wanted.
How can we make decisions that really support what we want in life despite our money values?
The first step is to acknowledge them! You cannot change what you do not acknowledge. Once they are out in the open you have to ability to change them, keeping what you like and changing what doesn’t work for you. The next step is to decide what you really want out of life and write it down. I’m surprised that most people don’t do this. Once you have done that you can start prioritizing your big goals and quantifying them in terms of time commitment and financial resources required. Now you can evaluate your spending to see if it is really supporting the most important things you want out of life; to the extent that it is not, you have now given yourself the motivation to change your spending priorities.
How do we keep our goals front and center once the initial excitement wears off?
It is important to share your goals with those close to you and enroll them in supporting you.
Example: You start to bring your lunch to work everyday and your best friend at work starts to give you a hard time about it. Tell him that the reason you are bringing your lunch to work is that you are saving money to ( share your big goal and why it’s important to you), and that you hope that he can support you in achieving it.
Initially this will be disruptive to your relationships especially if it is a major change in your spending. It’s important to hold firm, and it may require you to reduce or eliminate contact with people that do not support your new direction. They may try to sabotage your change because it could be very threatening to them. However, this gives you the opportunity to spend more time with people who are supportive or seek out people who will support you in archiving what’s important to you.
I know this didn’t sound a lot like typically financial planning stuff but this is really at the heart of what I do. I see my role as helping clients identify what’s important to them, and making the unconscious decisions they are make conscious.