30 March 2024
Bruce Helmer and Peg Webb
Aligning your investments with what matters most to you is essential to living life authentically. But figuring out what you value the most isn’t always straightforward.
Defining what’s important
So, let’s open with a simple question: What are your values, and how do they show up in your life, in your relationships, and in your finances? So much of our daily lives are flooded with superfluous information and people telling us what we should be doing at any given moment.
When it comes to organizing your finances into a cohesive plan, we take an opposing view — to be true to yourself, start by identifying what you value, and then align those values to your financial plan. It all comes down to how you visualize living your best life. There are many examples of personal values that resonate with you and that can inform your financial decisions. The desire for security or abundance, for example, or lifelong learning or freedom, or serving your community or living sustainably, all can serve as one or more bedrock principles that help guide your financial life.
Setting financial goals
Once you are clear on values, set your financial goals. What do you want to achieve with your money or your time? Is it to achieve concrete goals, such as living debt-free or providing for your children’s future? Are you interested in starting a business, saving for a down payment on a home, or investing for retirement? Or maybe your goals are loftier, engaging your passions, talents, and sense of purpose to form a trinity of values that can make a difference in the world. Who would you like to help? How would you like to leave the world a little better? How can you engage your children to pursue what they’re passionate about, and can you help them make a bigger impact through your experience and resources?
Whatever you decide, make sure your goals are specific, measurable, and realistic. Goals are not about achieving perfection: they’re about charting a course so that as life events unfold, you can make needed adjustments while staying clear about the overall direction of your goal.
Evaluating your financial status
The next step in marrying your values to your investments is to evaluate your current financial situation. What are the sources and uses of your income? Do you have a firm grasp of your expenses, and where the money goes each month? Are you burdened by unproductive debt that builds no value on your household balance sheet?
With a better grasp of your financial status, you can begin to align your everyday spending habits with your values. For example, if you value financial security, creating and sticking to a budget may be especially important to you. If you value abundance, on the other hand, you may want to budget for more big-ticket items, such as an annual vacation trip or a more luxurious home or car. Or if you are committed to living more sustainably or intentionally, you may want to look for ways to reduce your carbon footprint or buy from companies that have high green ratings.
Squaring values with your investments
As you further develop the principles that help guide the way you want to live, you may want to reconcile those values with your investments. Values of abundance and generosity may point you to investment options that potentially grow over time (that is, that generate high returns). If this is the case, you may be comfortable with a more aggressive target asset allocation that weighs stocks more heavily than bonds.
However, if your guiding star values security and sustainability, that may suggest that peace of mind may be more important to you than high returns and guide you to more safe-haven investments such as fixed income (keeping some exposure to stocks in most cases). Or you may decide that your values place you somewhere in between. There is no one-size-fits-all investment strategy that meets everyone’s goals and objectives.
Evaluating and adjusting your plan
Your income, debt load, and expenses undoubtedly will change over time. You need to be vigilant and revisit your financial plan from time to time to make sure it can support the life you want to live.
As the ancient philosophers stressed, a life well lived is not about simply accumulating wealth. It’s built on a foundation of self-sufficiency, self-confidence, and service. It’s filled with close, supportive relationships that require time and effort to nurture. Investing your values, more than your money is key to achieving joy and meaning in life.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at [email protected]. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.