When I was a kid, money was something that I used for Pokemon cards and Pogs. It meant that if I did enough extra chores (above the usual expected housework), I could get a couple of dollars together to get a fresh pack of Pokemon cards. Even then, I was a consumer – trading my time for money and then my money for things. I had no idea what this meant. All I cared about was that I had earned my new cards for myself. Many people think this way. Particularly, in the form of “Treat yo’self!” The concept that money is equal to consumer items and that we justify those purchases as something we deserve can be a dangerous one.515fvxxv1kl-_sx322_bo1204203200_

I found myself first questioning this concept upon reading the book “Smart Women Finish Rich” by David Bach. Bach lays out the concept that your core values should drive your money spending habits.  He starts by moving away from money to talk about your goals to show how money can be used to obtain those goals.

To boil the process down, start with “What’s important about money to me?”.  This addresses the question of what you would use your money for that actually matters.  Your answer may be that it allows you to spend more time with your family.  This question then becomes “What’s important about spending more time with my family to me?”  This question asks what the motivation is behind your goals, leading you to your values.  It also shows that how you handle your money can either make or break you in achieving those goals.

Take the time to stop and think about your core values. Do you value security? Freedom? Family? Independence? What is it that gets you out of bed in the morning?  Relating money with your values can feel dirty because that is the image society has projected.  Talking about money and making money an important part of your life is not deemed a noble pursuit (think about the term money grubbing).  However, money and values cannot be unrelated because both point you in the direction you want your life to go.  Values are the why, goals are the what/where and money is the how or the tool you will use to get there.

Ah Bob. You are sorely missed.

Where do you see yourself in 5 years? I bet that the answer to that question has nothing to do with how many pedicures you’ve gotten in that time or whether or not you have latest iPhone. Go ahead and paint a picture. (Think happy trees, folks.) I’ll use myself from when  back when I discovered this book as an example: I saw myself debt free, moving out of my mom’s house, working a job I love and on track for retirement (I hadn’t quite discovered early retirement yet), while still being able to learn and travel.

Now let’s break that scene apart into goals:

Debt free

Living on my own

Working a job that I love

Being on track for retirement

Continuing to learn and travel

Each of these goals links back to one, or more, of my values.

Debt free – Security/Independence

Living on my own – Independence/Freedom

Working a job that I love – Fulfillment

Being on track for retirement – Security/Family/Freedom/Independence

Continuing to learn and travel – Growth/Adventure

My values and goals concentrate my focus to how I want to live my life and, by extension, spend my money.  This was not always the case.  I used to spend a lot of money on things that had nothing to do with any of my values.  Upon reading this book, I came to the realization that money spending habits drive the direction of life and at that time, my habits and direction were not aligned with my values.  At the risk of sounding preachy, I’m going to say that again just because I think it is so crucial.

How you spend your money drives the direction of your life. 

At the time that I read this book, I had about $50,000 in student loans left and a $20,000 car loan.  My money was going to someone else, meaning the banks, instead of working for me and pointing me towards my goals.  I decided to change this.  I tripled the amount that I was paying to my student loans and paid an extra 50% to my car.  I put everything that I could towards getting rid of my debt and providing myself with the security of not owing money to anyone. The result was absolutely freeing.

More importantly than finally achieving my goal of being debt free was my change of mindset. I went from thinking of money as a way to acquire things that I thought I deserved to thinking of how money could work for me and help me move towards my goals. It can feel dirty to think of money as being tied to your values, but it’s also realistic. Money is just the tool you can use to buy yourself far more valuable things…time and freedom.

What are some of your values that you use money to reinforce?  How far are you on your journey?  Let me know in the comments below!