Look Inward to Determine Your Financial Values

I’ve been surprised by a lot of things as a financial adviser. One of the biggest surprises has ended up playing a critical role in my development: the process of self-examination.

It has mattered both professionally and personally, and it should to you too. Yet hardly anyone openly talks about the need to get really clear with ourselves in an attempt to understand why do we do what we do with our money. And this avoidance is an enormous mistake.

But it’s also an error we can correct any time we want by getting clear about our values. Asking a few, simple questions can help reveal what matters most:

■ Why is money important to you?

■ Why do you spend the way you do?

■ Why do you invest the way you do?

These questions help reveal what I call our financial values, or maybe even more accurately, our life values. If you don’t have answers to these questions, dig deeper. For instance, if you don’t understand why your money is invested in a certain way, ask more questions. Whose advice are you taking? What advice have you ignored, and why? The best investments for you need to be based on your own goals and values.

Use these answers as a starting point to discover how you really spend both your time and your money (and spend your time in pursuit of more money, as the case may be). Does your behavior really match up with what you said was most important?

Fair warning: The first time through this process can be scary, possibly painful. We may learn of inconsistencies between what we say that we value and what we actually do. Even now, after going through this process many times, I still find myself spending time and money on things that don’t match my values. So, this first time through, don’t be shocked if you discover there’s little overlap between what you say you value and what your actions and time charts actually reflect.

We aren’t going through this process to be judgmental. The goal also isn’t to beat ourselves up for what we aren’t doing. Instead, as a part of this process, we’re going to learn to say, “Isn’t that interesting?”

Our goal is to uncover those moments when the way we spend our time and money don’t align with our values. We don’t need to get mad. We’re just going to notice.

As we notice, keep two things in mind. First, maybe what we said was important to us, and what we really believed was important to us, isn’t that important. I’ve seen many instances where someone was convinced they valued something a lot, but it turned out they were relying on someone else’s values, like their community or their parents.

For years, my friend Dallas Hartwig kept telling himself that he really valued buying a home. He had convinced himself that he valued the security he associated with owning a house. He had the resources, but he kept making decisions that didn’t get him any closer to obtaining this thing he thought he valued.

After he took the time to notice and to ask questions, he finally realized that he valued flexibility and freedom more than security. Buying a home turned out to be someone else’s value. Letting go gave him the freedom to weigh his choices against his real values.

Second, we’re never done making changes to align our behavior with our values. Going through this process doesn’t transform us into perfect people. We’re still human, and we’re never going to get it exactly right.

And that’s O.K. Over time, the process of reviewing our values and noticing our behavior can help us get closer to alignment. We are works in progress.

The alternative is the path too many of us take, chasing after random prescriptions for our financial lives and telling ourselves that we’ve got it all figured out. Or we could take a deep breath and ask “Why?” Only then can we weigh if what we’re doing aligns with the things we say matter most to us, or if we need to make some changes.

This commentary originally appeared April 20 on NYTimes.com

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2015, The BAM ALLIANCE

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Carl Richards, CFP®

Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, "The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money."

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