If I were to ask 20 people in my social circle “do you spend your money according to your values?” I guarantee that 19 of them would say yes. One (and I have a particular person in mind here) would likely hesitate, think for a few minutes, and then say “mostly”. In reality, I think the answer for most people is “not really”.

It’s not because people don’t care about their values. It’s not necessarily because they don’t think about how they spend their money (although that is certainly a contributor). In my opinion, it’s mostly because they have never considered the question.

What a shame!

We’ve all heard that cliché that money doesn’t buy happiness. And many of us have likely stumbled across the statistic that once you earn $75,000 a year the potential for money to buy happiness plateaus. Do you agree with that number? I suspect you don’t. I suspect your reaction is something along the lines of “well, maybe, but not for me because… [I’m barely making it on $100k/yr; I live in an expensive city; I have to take of my ill mother; I have to pay for college tuition; I could get a massage every week if I made more and that would DEFINITELY increase my happiness, etc.]”

Well I don’t necessarily agree with it either. But I don’t think the problem is with the number. Plenty of people are gloriously content with their lives living on $50k/year. Others are miserable living on $325k/year. I know plenty of people in both camps. And trust me, the difference is not the size of the hoard. The difference is a) mindset and b) the extent to which your spending aligns with your values.

This post is about part (b).

I am a firm believer that your actions reflect your values. This is just as true with your finances as it is with your deeds and your words. If you claim to value fitness and health, but you come home every night, eat Twinkies and watch tv, then you are lying to yourself. The same thing happens with money. If you consider yourself to be a highly generous person, yet your annual contribution to charity/family/others consists of donating old clothes that you bought at Target to Goodwill, then you are lying to yourself. This misalignment does not lead to mental wellness, either in the short or long term.

The key is in determining what your REAL values are and then making choices every day (and every year) that tie in to those values. A secondary, but no less important point here, is that YOUR values do not have to align with other people’s values (unless, of course, you are married to them… more on that later).

Based on hundreds of discussions with friends and family about these topics, here is my (admittedly anecdotal) estimate of how most people prioritize their money:

1. Housing
2. Food
3. Cars
4. Things for their children
5. Things for themselves
6. Health insurance
7. Experiences that make them look good compared to others / inspire envy / allow beautiful Instagram posts
8. Things that “everyone else is buying”
9. Actual household needs
10. General savings
11. College savings
12. Retirement savings
13. Charitable giving / gifts to others

Now, looking at that list… what items do you think bring the most wellness, contentment and happiness? Which items are most likely to lead to a satisfied, full life?

I’m not claiming to have the answer – I’m all about the gray. It’s possible that if your No. 1 value is “family” then you may very well gain as much happiness from buying things for your children as you do saving for their college. But it’s also possible that when framed in that way, it is self-evident that an additional video game today will not reap the same psychological reward as tucking away that $30 for college. Just a thought.

Similarly, if you value giving to others then it probably shouldn’t be the last item on your list. Which brings me to my (again, highly anecdotal) summary of how most people prioritize their giving:

1. Donations of highly used items that they want out of their house
2. Cash to children’s school activities / fundraisers
3. Random asks from friends / acquaintances
4. Races / events
5. One off volunteer days through work or school
6. Tithing
7. Fundraising drives
8. Workplace giving campaign
9. Tax sheltering / end of year gifts
10. Regular volunteer activity

What’s wrong with this list? Lack of intentionality. With the exception of 6 & 10 (and possibly 9), these donation methods are all about reacting to asks from others. The likelihood of creating a long term happiness boosting, wellness raising plan from most of these items is very low! The likelihood of giving small amounts of money to tens of different organizations, many of which are not effective or aligned with your priorities, is very high! If you are one of those people (and I used to be one) who looks up at the end of the year and thinks “I did a lot for charity this year; I gave… $300 to 12 organizations.” Then this idea of looking into values alignment is for you.

Now, let me be clear: I am not saying that $300 a year isn’t enough. I am also not saying that giving to 12 organizations is bad (more on this later). What I am getting at is that they should be organizations that you genuinely care about. Organizations that you ACTIVELY choose. And organizations that are going to spend your money in an effective way (also, more on this later).

So let’s talk about values. And framing. Because we, as humans, are surprisingly adept at adopting a mental framework that supports our current situations. Consider these two statements:

1. I value my family, so I choose to have a short commute in order to be home for dinner.
2. I value my family, so I choose to have a longer commute in order to provide them with a larger house.

Which statement is “right”? Neither, of course. Knowing that you value family, community, faith, time, etc. is NOT ENOUGH. Everyone (at least, everyone I care to spend time with) values these things. But they are not specific enough to guide you in making the right happiness-creating choices. In fact, both of those statements are as likely to be self-rationalizations for choices you have ALREADY made, vs. the ones that will bring you the most happiness.

Now consider these situations:

1. I value TIME with my family, so I am willing to live in a smaller house / pay more for a mortgage in the city / take a part time job / have a stay at home parent, etc.
2. I value EDUCATION for my family, so I am willing to pay to live in a better school district / pay for private school / save for college / volunteer at their school / teach them at home, etc.
3. I value EXPERIENCES for my family, so I am willing to save for vacation / travel to see other family members / pay for a pool membership / buy Christmas decorations, etc.

See how that works? Of course, with all things money and time related, you can’t have everything. But being more specific in your value definitions allows you to evaluate your real priorities. It is my personal opinion that it is hard to come up with value statements that focus on owning “things”. Perhaps that’s just a glaring hole in my personality – feel free to comment as such if you think I’m out of line – although I think is has more to do with the transient nature of things vs. the real questions of life. (You’ll note that I listed Christmas decorations above… I happen to know quite a few people who derive real, deep, personal satisfaction from celebrating the holidays with a massively decorated house. For them the memories, pictures, cozy family bonding time, etc. that comes from the purchases makes them highly aligned with their values. That is totally fine. But it’s still about recognizing what MATTERS to you and then acting/spending in line with that.)

So now that we’ve (briefly) covered the alignment of spending and values… let’s get on to a more pressing matter: Why do we give to others?