Is Your Budget Lying About Your Values?

One of my first conversations with Don this morning went like this:

Don: Honey, I need a refrigerator in the shed.

Me: Why?

Don: Because I want to have cold drinks out there, so I need a fridge.

Now, his shed/workshop is a 12 x 30′ shed with power, lights, and air conditioning.  It’s also approximately 80 feet from our back door, so (at least in theory) he could bring a cold drink with him from the house. So the conversation continued…

Me: So, what you’re saying is you NEED a third refrigerator in the shed (yes, we already have TWO; one in the kitchen, and one in the garage) because you can’t just take a cold drink out there with you?  And having that third refrigerator is a higher priority than adding another $150 to our savings right now?

Don: Not a big one, honey!  Just a little one for drinks!  It’s not that big of a deal.

Let’s leave aside for the moment the fact that he was seriously mis-using the word “need.”  This conversation brought to light a question I’ve been contemplating for a while:

What does your money say you prioritize?

And, perhaps just as important:

What does your money say you believe?

To take this to an extreme example – Don’s request for another refrigerator is saying: I value the convenience of having drinks within arm’s reach over everything else I could do with that $150. Wow. What else COULD he do with that $150 (assuming we buy a new, small 3-4 c.f. refrigerator)?  For argument’s sake, let’s list a few of the other, theoretically higher priority, items that we’re supposed to be focused on right now:

• Adding $150 to our long-term savings and investments, resulting in additional income for years to come
• Paying off $150 of debt, reducing our interest payments
• Spending one night traveling or exploring the world (assuming $150 will cover a night’s hotel)
• Taking two trips out fishing on the boat ($150 = enough to cover fuel for a couple of small trips)
• Performing routine maintenance on my car, extending its life

I’ll spare you a longer list, but you get the idea. Now, am I saying it’s never okay to buy another refrigerator?  Of course not!  But I am saying that, in order to meet aggressive freedom goals in your financial world, you’ll have to start focusing on what’s really important. As many, many smarter writers have covered in detail – there is an opportunity cost to each and every decision you make.  If you spend $150 on a refrigerator, you cannot also spend that money on anything else.  So, make sure that whatever you spend it on is worth NOT spending it on anything else. Let’s take a look at some areas of our lives where I think our finances aren’t accurately reflecting our values:

1. I believe it’s very important to teach my son healthy eating habits early on.  I want him to eat when he’s hungry, and not just because his Italian grandmother is guilt-tripping him for not finishing his pasta (which is what happened when I was a kid!).  However, our weekly-or-more trips through the drive through for dinner because we haven’t left enough time between activities for a home-cooked meal isn’t reflecting this belief AT ALL.  In fact, it’s saying “I prioritize convenience and speed over healthy eating.” Ouch.  This is why we’ve been working on meal planning recently.
2. I would like to see smaller, local merchants succeed over a huge behemoth like Walmart.  And while I wouldn’t say we spend a ton at Walmart, the convenience of having everything in a one-stop-shop has made our trips there more frequent than they used to be.  So, right now our finances are saying “We love Walmart – to heck with the local merchants!”
3. The continued existence of a very expensive storage unit where all of Don’s old stuff is stored translates to “We would rather spend money keeping old junk that we haven’t used in years just in case we need it than anything else we could do with $2,400 a year.” Again, ouch!  This one is more security-related; I think it makes Don feel better to know he has a 10×20 storage unit full of belongings in case he needs them.  I suspect it’s a holdover from periods of his life where he owned almost nothing, and didn’t have the means to buy what he needed.

I could keep going, but you get the general idea.  There are also areas where the opposite is true – where I say I value something, but am not spending money that reflects that value. For example, I think that having a strong church family is crucial to success, both personally and professionally.  But, until this year, we haven’t had a formal budget item dedicated to giving to the church, helping keep it strong and healthy. I also believe that live theater is amazing, and sparks creativity, introspection, and personal growth.  However, I rarely set aside the money to attend shows instead of other forms of entertainment. As you complete your financial planning and revisit your budget, investing, and money management for the new year, ask yourself: Is this decision consistent with my beliefs? If yes, you know you’re on the right track.  If that answer is no, or if even asking the question makes you uncomfortable…it’s a sign something needs to shift. I’m sure you have your own examples of places you’re spending money inconsistently with your beliefs and values, and other places you’re not spending money that you should.  Share in the comments, so we can learn from each other. Need some help figuring out your values and how they affect your finances?  Take the LifeValues Quiz over at Smart About Money (it’s free).  My results, for example, are very low in Physical Values.  In other words, I value experiences over stuff, and don’t typically acquire a lot of belongings.  Yep, they got that one right! What were your results?  Are they accurate, or not? Comment below!