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A Primer on Values-Based Money Management

What system do you use to manage your money? Did you get it from a book? Trial and error?

Is it working well for you?

I’ve been using and teaching a values-based money management approach for years now. You know how I came up with my unique take on money management?

Failure – lots of it.

When I first started helping families with their finances, I talked about budgeting.


Because every book I got my hands on said, “You need a budget.”

In fact, “create a budget” showed up as the #1 or #2 item on pretty much every how-to-master-your-finances list I came across. Just count the number of books on budgeting at your local bookstore. It’s surprising how many there are.

Surely, it had to be the right thing to do.

So, that’s what I taught.

Isn’t it ironic?

Want to know why people turned to me for help?

They wanted my results. They felt that I was relatable because, at one point, I stared down $400,000 of debt and came out on top two years later.

What they really wanted to know was how on earth I had wiped that out in two years and how I built a strong net worth in the intervening years.

Could I help them do that?

Could I help them boot persistent debt to the curb, finally build their savings, and create better opportunities for themselves? And more peace of mind?

Would it work for them if they had zero confidence and declared themselves to be “not so great with money”?

Way back when, I had never taught others to do what I had done, but I felt certain that I could.

knew in my heart that I could help people, but doubt set in when it came to the methodology.

As an incurable researcher, I knew perfectly well that it’s not enough to know something; if you want to help others get results, you have to be able to break down your own results into understandable, duplicatable steps. You also have to ensure that what worked for you will work for others.

And that’s where the trouble started – because I doubted myself.

My methods didn’t fit inside the accepted wisdom. There was nothing in the literature to back me up. I couldn’t possibly use that as the basis for my methodology.

So I turned to the Budgeting Bible for guidance.

And that’s where I went wrong.

Budgeting fail

Since every personal finance book I could get my hands on talked about using a budget as the basis for a strong management system, that’s the approach I used.

Even though, at the time, I had never used a budget.

I certainly tracked my money, but I did not budget in the conventional sense of the word.

(Fast-forward more than fifteen years later: I still don’t have a budget for my personal finances. Never have; never will.)

When I sat down with families to tackle challenging financial situations, I used my experience with difficult files in my Rent to Own real estate business to break down the issues, identify priorities, create a budget, and apportion the spending.

It was all there in a tidy package. 📦

All the clients had to do was to follow the budget.

Here’s what surprised me: Most people struggled even though the budget was created for them with their help. I was also right there to guide them and serve as their accountability partner.

But it’s when I followed up several months after they reached their goals and stopped being my clients that I was shocked.

The majority had fallen right back into their old habits of accumulating debt, saving little money, and over-spending.


Face palm moment

It seems painfully obvious to me now, but it wasn’t until I took a big step back to reflect on what the hell was going on that I realized my mistake:

I had not taught them what worked for me. I taught them the budget-first strategy that society lauds as the way to create rock-solid finances.

In short, I had followed the “cool kids” without a shred of evidence that their method works.  🤦

And it wasn’t even the approach I used to create a strong financial foundation for myself.

It wasn’t until I sat down to do the hard work of figuring out exactly what had worked for me that I came to a fundamental realization:

What helped me pay off $400,000 of debt and create a strong net worth for myself was getting really clear on my core values and creating a money management system that fed into those values every step of the way. If a choice didn’t fit into my values, it would not get funding. Simple as that.

That’s when I started to refer to my system as values-based.

There was no book to guide me, no one to name it; it came from an analysis of my personal experience and answering the questions, “Why did my results persist? Why did my approach work for me?”

The beauty of this system is that it is not prescriptive; it won’t tell you what to do, because no two people are alike. Personal finance isn’t a one size fits all game.

Here’s an example of that:

Mary and Jessica are both tackling debt. When they track their respective spending patterns, they notice that they spend a chunk of change on going out to restaurants every month.

The Budgeting Bible would dictate that spending on restaurants is superfluous; it has to go.

However, when you talk to Mary and Jessica about their core values, you discover something interesting.

While tossing out all spending on restaurants isn’t fun for Jessica, it’s not a big deal. She can swing it until her finances become healthier – corrosive debt is eliminated and her savings rate is in the double digits.

Mary, on the other hand, feels stressed by the suggestion. A little more digging reveals that this is the only time she has with her two grown daughters.

Mary is remarried, which means her husband isn’t the girls’ father, and the girls have families of their own. The only time and the only way they can connect for cherished mother-daughter time is for meals out, which they did a couple times a month.

By using a values-based money management approach, Mary decides to keep one of the meals out per month to ensure she retains some quality time with her daughters, and she decides to give up another expense which she values less.

Same financial outcome, but a vastly different emotional outcome.

Which approach do you think Mary will stick with?

I can answer that question, because Mary was a client of mine.

Two years later, she had wiped out tens of thousands of dollars of debt without giving up the outing that brings her so much joy.

A values-based approach gives you the freedom to toss out societal prescriptions about what’s “sensible” when you’re tackling financial goals. Nobody but you gets to decide that.

Your values-based money management system – never budget again

Here’s what my system boils down to:

Step 1 – Identify your starting point

This is where you track your income and your spending so that you can answer the following questions:

  • Where does your money go? (Cashflow)
  • How much debt, corrosive or otherwise, do you have? (Liabilities)
  • Is your debt increasing, decreasing, or recurring? (Patterns)
  • How much are you saving? (Savings rate)
  • What are you doing with your savings? (Emergency Fund, planned savings, and investments)

Tracking is ongoing. Later in the process, you’ll automate parts of this step and create systems to make this easier.

Step 2 – Clarify what matters –> Core Values

As you’re working on Step 1, you start to ask yourself, “What is most important for me? What are my non-negotiables?”

You drill down until you have 5 to 10 specific core values listed out. These become your North Star as you create goals and make financial decisions.

Step 3 – Create values-based goals

In this step, you identify top level goals that are congruent with your values. Once you’ve got those, you break them down into mid-level and lower-level goals. The latter act as your first targets from which you identify small action steps, which you tackle one at a time.

For example, if persistent debt is an issue for you, you might say that you want to be debt-free. However, that’s not really the top-level goal.

The top goal is to be financially secure or financially free. Wiping out debt is a mid-level goal that might look like this: “Pay off all my credit card balances”.

In this scenario, a low-level goal could be: “Increase monthly payments to $500 on my Mastercard to pay if off by December”.

An action step related to this low-level goal might be: “Log onto my bank account and increase automated M/C payments to $500 per month.”

Each step and each goal feeds into your top level goal of being financially free and enjoying peace of mind, which, in this example is a core value.

Step 4 – Apply the Values Filter to your finances

Pop back to your tracking tool – whether that’s a spreadsheet, an app, or a hand-written document – and walk through line by line asking whether or not that spending is in line with your values.

Every total goes through the Values Filter and is assessed relative to your core values and values-based goals.

Step 5 – Identify your first steps using my Roadmap to Financial Freedom

I’ve created a free Masterclass training for you that shows you exactly where to start and what to do first.

You can access the free training HERE. 

Step 6 – Proceed ONE step at a time

I have a rule: Focus on one thing at a time.

It’s a myth to think that you can multitask. I get the temptation – I have to keep fighting it off, too.

I know you’re juggling fourteen balls at once. You might think that it’s effective to try to pull off two things at once, but the research is clear on this point: not gonna happen.

What you’ll do instead is divide your attention and do a lesser job of both tasks.

Identify the very first step in accomplishing your goals based on Step 5 and focus only on that step to start.

That’s how I paid off $400,000 in two years and built a seven-figure net worth – one small step at a time.

Why it works

In a nutshell, the power of this system is based on the fact that it’s tied to things you give a damn about; things that are meaningful to you.

There are no prescriptions.

Behaviorally, it’s much easier to maintain because again, your core values drive your decisions.

I don’t have to remind you not to get take-out mindlessly just because you’re tired when you already know that those dollars are destined for the special family trip fund – the trip that will light up your kids and provide cherished memories for a lifetime.

You never again have to tell kids who are pleading with you to buy this, that, and the other in a store that you can’t afford it.

Instead, you’ll let them decide what they value by saying something like, “I get it. I think that’s a cool toy, too! But if you buy that toy, it means that you have to let go of something else you had planned to buy this month. Which do you want more?”

Suddenly, they’re in charge of their choice and they’re making a decision about what they value, while learning an important lesson about choices.

And not once did you have to dip into a scarcity mentality.

When you’re in a store, walking by a super cute pair of shoes and you think, “Should I buy these? They’d look so good on me!”, you don’t need to pull out a budgeting app to check on your numbers.

You simply ask yourself, “Is this in line with my values and my goals?” The choice becomes clear very quickly.

As one of my course students said said, “This approach is so freeing!”

You’ll notice that nowhere above did I mention the word budget.

There is no trying to fit your round life into a series of square budgetary boxes with my values-based money management system.

You plan, you track, and you keep checking in with your core values.

Most importantly, you stop stressing about the pennies and you focus on the dollars.

That, in a nutshell, is how my values-based money management system works.

It has helped thousands of people knock off debt when they thought it was impossible, build their savings even on small incomes, and create some seriously cool results with their finances.

Best of all, it’s helped them get more joy from their money.

Give it a try. I’m pretty sure you’ll be surprised at how easy it is to implement once you’ve nailed down your core values.

If you’ve been in my community for a while and you’ve been using this approach, leave a comment below to let me know how you’re doing.

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