The Largest Cause of Financial Distress

I’ve long thought and written about simplicity, minimalism, and essentialism–specifically their ability to challenge my perceptions of wants, needs, and life satisfaction. From material possessions to free time, I resolved to spend the limited resources I have (time, money, energy) in a way that connects my visions with reality.

These concepts have forever altered the lens through which I evaluate the world. Remaining disciplined is a challenge, but I welcome it. It keeps me honest and tests me in uncomfortable ways. While my goals and values change throughout the course of my life, I’ve found the process useful for the following reason:

It requires introspection and intentionality.

The act of doing something with purpose, with forethought. In this case, doing something repeatedly, with intention, aligned with my goals for long-term gains. Over the past four years, bringing this intentionality to my spending has brought immense peace of mind. It’s slowly becoming a life mission of mine to educate and empower others to find the same freedom.

The Worst Money Mistake You Can Make

If asked to identify the most pervasive and detrimental cause of most people’s financial anxieties, it’s this:

We are not spending money in alignment with our personal values.

When our spending is NOT aligned with our values, it causes two major issues:

  1. There is a consistent shortage of resources to do the things you want in life
  2. There is a consistent excess of spending on things you do not value

Both cause distress and disappointment. We are creating a self-imposed, paycheck-to-paycheck struggle. We fail to recognize the undeniable push and pull between our time, money, energy, and how life unfolds before us. This is not simply “how life is”.

To put it another way, I observe we often think of our ‘money lives’ as something independent from our ‘real lives’. As if they are not deeply interconnected. As if these two spheres can be dealt with at different times and in different ways.

We struggle to see how actions in one arena lead to trade-offs or disappointment in another. Bridging this gap is critical to making progress on our financial health.

Am I The Only One…?

Money is something we use so often, that everyone must have a handle on it right? After all, wouldn’t it be a little embarrassing to admit you don’t really get money?

People don’t, and you shouldn’t.

We continue to deal society a bad hand, and I believe financial literacy is one of the most alarming educational issues for the industrialized world. From the poverty line to people earning 6-figure incomes.

The ubiquity of money leads us to a false notion that common usage equals comprehension. Unfortunately that’s a dangerous line of thinking with equally difficult-to-swallow consequences. We know how to use it, but do we really understand our spending philosophy? Listen to some common words used when talking about money:

I earn it, I spend it, I fear it, I want it, I give it, I cash it, I covet it, I steal it, I count it.

But for so many of us…

I ignore it.

The words are not so much about what money is (paper, tender, fiat currency, etc.), but how people think about it, feel about it, relate to it. It becomes clear we all have a relationship with money, and therein lies so many of our woes. We’re not getting clear on what that looks like.

So is it possible we all still have something to learn about how to use money effectively? I say absolutely!

Many of us want the shame, guilt, or confusion of money to simply go away. Instead, I encourage you to take an empowering step in the other direction. The best “financial” investment you can make is getting clear about your values and spending your money accordingly.

Crafting a Smart Money Strategy

When I work with others to strengthen their financial lives, they’re often surprised by the first few exercises: establishing values and goals. Wait…what? But…numbers! Math!

No, no, no.

Without a clear picture of what individuals value in life, providing insights and discussing their spending habits is a fruitless task. I am not there to direct their spending and tell them what’s right or wrong to buy, but I will certainly hold them accountable to the aspirations they put forth.

There is no be all end all prescription for tackling some of those large questions in life: What are my values? Where do I want to be in 5 years? What legacy do I want to leave for my children and community?

But they are essential to lifting yourself beyond the influences of others, people trying to take advantage of you, and the many distractions we face everyday. Consult yourself in a quiet moment, review these with your family or spouse, and weight them against your moral code, religious beliefs, and the world at large.

Outline Your Values and Goals

  1. For a starting point, consider this comprehensive list of values. At first pass, jot down everything that resonates with you. They are all great things to aspire and cultivate, so knowing thyself is the best way to narrow the list. Pare down the concepts until 5-10 remain.
  2. With these values in mind, craft a list of personal life goals. It could be spending an hour with your children each evening, improving your physical fitness, furthering your education, etc. You may already be working towards some of these pursuits, but compile a list of 5 personal goals based on what you’ve identified as important values.
  3. As you can imagine, there must be money involved here somewhere! When used properly, money is a great resource which can create the life you want and provide safety and security. Finally, generate 5 financial goals to satisfy your values and life aspirations from Step 1 and 2. I would encourage you to include a rough timeline of when you wish to see results.

At the end of this event, you’ll have a list of 5-10 core values, at least 5 life goals, and a least 5 financial goals to help you get there.

This method is what I would call a “ground-up” approach. We are replacing external wants and needs (owning a home, new phone, athletic attire) with internal wants and needs (security, connection, health) and building accordingly. This is the best way I know to question you wants and evaluate your motives.

From this strong base of ideas, we branch into personal and financial goals. While I encouraged separate lists, you’ll notice they are deeply intertwined–the push and pull is present. There will be successes and sacrifices along the way. However, I’m confident this short exercise will begin your path towards the latter.

As you continue toward financial literacy, things will become less philosophical and more practical. However, this vision is remarkably important as a guiding force in your financial decision making. It will serve as a north star for the everyday choices you make in the days ahead.

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