How to understand your Money Values

I have the pleasure to introduce this guest blog from the very knowledgeable Financial Coach, May Fairweather of Fairweather Adventure Finances. Money is something that we can’t avoid, however it can feel overwhelming and impact all aspects of our wellbeing. May has a unique combination of financial management (including debt advice) and counselling qualifications, so she is perfectly placed to provide this blog on “How to understand your Money Values”.  Over to you, May!

 

For many of us, life is made up of a series of reactions to things. We go shopping when the cupboards are looking sparse, we take the bins out when they’re overflowing (or smelly), we buy new shoes for the kids when they complain their toes are squashed.

Day-to-day decisions are either on autopilot or reactive, because there’s rarely enough time to sit down and think deeply about every single choice. That’s totally normal, and it would be daft to call a household meeting to debate whether or not the laundry needs doing.

The problem appears when that reactive-autopilot approach is applied to bigger, more important decisions. If you leave the major aspects of your life up to chance and circumstance, you’re taking a big risk that it won’t work out how you’d have preferred.

Personal finance is a common example of this, from small recurring costs like subscriptions you’re no longer using but haven’t cancelled, to big life decisions that are constrained by financial implications. Although people often believe that having more money would give them more freedom, it’s rarely the case in practice. As income increases, so does spending, with the end result being that you can have less freedom, because you’re financially committed to so many things which rely on your income that you can’t do anything that might risk it.

As a financial coach, I believe that there’s no such thing as “bad” spending. Unless you’re hiring assassins to take out your enemies or setting up a people-trafficking ring, your decisions about how to use your money carry no moral weight. What does matter, though, is whether they are aligned with your individual, and household, values and priorities. A client recently told me about a purchase he had made: an electric heated jacket to wear while he worked outdoors. It sounded brilliant, especially considering we had just been talking about how cold he got at work sometimes, so I was startled when he followed up with “I know I shouldn’t have got it”. Why not? I asked, genuinely perplexed. Because, he said, it was a waste of money.

Unpacking that statement was revealing. He hadn’t gone into debt to buy it, it wasn’t outrageously expensive, and he admitted that if his partner had been in his position, he’d have bought it for her without question. For himself, though, it felt like a frivolous luxury.

My question to him, and to anyone reading this, is: what is money for, if not to allow you the freedom to buy things that will make your daily life a little less uncomfortable, and a little more pleasant? We are not dragons hoarding gold. Owning money is, in itself, not particularly useful. Since UK bank notes are now made of plastic, you can’t even set fire to it to keep warm. Its only value is as a tool to acquire other, more practical or enjoyable things.

At the same time as viewing spending on our own wellbeing as morally negative, we often also accept forms of spending that bring very little value to our lives. We allow insurance policies to renew without checking that they’re the cheapest option or that they cover what we need, or we pay 30p for a carrier bag because it’s too much effort to remember to bring one. Even worse, we miss out on financial opportunities because it’s too much hassle to switch bank accounts for a bonus, or to contribute the maximum amount that our employer will match in our pension scheme. Sometimes decisions like the pension one are driven by the same trap I mentioned earlier: too many financial obligations leaving no margin for error in the budget.

So how do you overcome the twin perils of inertia and self-flagellation and begin your journey towards genuine financial freedom, a life where you can make choices based on what you truly want and value, rather than what you believe you can afford? The first step is to become properly, acutely aware of your financial situation. Sit down with the last few months’ bank statements and make a note of the top ten things you spend money on, either by frequency or by amount spent. Then make a list of the top ten things you value in your life. How much do the two lists overlap, if at all? If someone else looked at your transactions, what would they consider your priorities to be?

Once you’ve identified your priorities and determined whether your spending reflects them, it’s time to make a budget. If you’ve never budgeted before, or if your approach to budgeting isn’t achieving what you hoped for, my simple guide to budgeting is a good place to start. A budget isn’t about restricting what you spend – in some cases, it can allow you to spend more by revealing that your fear that you can’t afford things is unfounded. It’s simply a spending plan that takes into account the reality of your circumstances, a reality that is there whether you admit it or not.

Sometimes when you become properly aware of your money situation, it is uncomfortably apparent that it isn’t sustainable. Perhaps you’re putting your essential expenses on the credit card each month and paying it off with the next month’s income. That’s all fine until next month’s income doesn’t arrive. Maybe you’re ignoring the steady approach of upcoming expenses, like house repairs, car replacement, or retirement. Few people would say that one of their top priorities was ensuring that they would be hungry, cold, and reliant on a meagre state pension in their old age, but if you’re not proactively saving money for that stage of your life then your actions are suggesting otherwise.

Many of the people I talk to seem to find the idea of facing their finances frightening. In my Animal Money Types quiz I call this the “Optimistic Ostrich” approach: head in the sand, hoping things will all be fine, because they usually are, and it’s too hard to do anything else. Interestingly though, the people I work with who have been forced to face up to their situation have all, without exception, discovered that being in control of their money lifts a burden of fear they hadn’t realised they were carrying.

Even more interestingly, tackling finances and becoming confident and calm about money can snowball into other areas of life as well. I’ve seen people take up regular exercise, reorganise their homes, address major relationship issues, and pursue dreams they thought were out of reach, all as a result of removing the lurking fear of money. I truly believe that knowledge is power when it comes to finances, and as long as you’re making informed choices based on your priorities and values, you can’t go far wrong.

 

If you are looking for more support, May has shared how, here:

I’ve developed a special bundle of videos and resources called the Big Decisions Pathway, to guide you through the process of making choices that are affected by, or will affect, your finances (and really, isn’t that all of them?). It’s part of a larger course that will launch in the spring, but you can get early access to the Big Decisions Pathway, the Debt-Free Pathway and my Simple Guide to Budgeting already. If you use those links you’ll get a 10% discount exclusively for members of the Balance Collective 🙂 The two pathways will only be available separately until the main course launches, so don’t miss out.

I also offer one-to-one coaching and you can subscribe to my newsletter for regular tips and updates. Happy decision making!

You can find other resources to support your wellbeing here, as well as a range of personal development books, covering a variety of topics.