Episode 2 - Shaping Your Family's Financial Future with Core Values
How do you define success? Your answer likely depends on your values. In episode 2 of the Beyond Budgets® podcast, we discuss why values should drive most (if not all) financial decisions. Once you’ve defined core values, learn how to:
Align spending with those values,
Include kids as accountability partners, and
Harness the power of an abundance mindset.
Be sure to listen to the end, where we address Dayna’s question about investments for kids.
Links
Blog Post: Values as a Foundation for Success
Mindtools Core Values exercise
Connect with Deb Meyer
Website: WorthyNest.com/podcast
Submit your family finance questions to podcast@worthynest.com
Get your FREE family finance starter guide
Pick up a copy of my book, Redefining Family Wealth
Full transcript
Deb Meyer (00:02.21)
Hello, this is Beyond Budgets® podcast episode two, where we talk about why values should be driving most, if not all of your financial planning decisions. How do you define success? If you're a Christian, is it your relationship with God? How about a happy marriage? What about being a great parent? Is it stewarding financial resources well?
Or is it providing service or some kind of value to others, typically through your job? All of these can be important parameters for success, and different people define success very differently. I know some people that are really wrapped up in the power and titles and money, and then other people who are much more defined by success with their relationships at home or their relationship with God.
Now I'm going to share two examples of core values of my own. But first I wanna start with a quote from Joshua Becker of Simple Money Magazine, which is an online resource. And he also has done a lot of other books and talks, things like that, but this really resonated with me and I hope it resonates with you.
Deb Meyer (01:53.95)
“Every increased possession adds increased anxiety into our lives. Everything we own takes up physical space in our home and mental space in our mind. Our possessions require maintenance and cleaning, creating a cause-and-effect relationship between our excess possessions and our overall lack of time, energy, and focus.”
Whew! I don't know about you, but for me, time is a very scarce resource. And when I think about clutter, I often just think about the physical aspect of clutter, not the emotional aspect. But that quote stopped me in my tracks, right? I hope you feel the same way. So when you think about getting rid of clutter, whether it be in your home or office space, it can be freeing not only physically, but also emotionally.
When you get down to the heart of simplicity, simple living, minimalism … this idea that less is more. And for a lot of people, when we have younger kids, there's a big emphasis on toys, right? And as those kids get older, it becomes less about the Fisher-Price toys that you can play with and more about electronics.
I have three boys - eight, ten, and fourteen years old - and I get lots of requests like: “Well I want the new phone because my friend has a phone”, “I want a watch”, “I want the new Nintendo Switch” … whatever it is. But to be honest, I don't often let my kids have them. We can technically afford those items but I typically would rather them just appreciate what they do have and let simplicity rule in our home.
So if I do buy a new Nintendo Switch or Xbox system or whatever it is, I'm giving away the old item to someone in need. I'm finding a better use for it elsewhere. And just as a practical example, think outside of toys. Maybe your kids are older and...
Deb Meyer (04:12.562)
grown either out of the house or close to it. If you think about just cleaning your office space, for me, I don't know if the same holds true for you, but if I come to work on Monday morning with a clear office space, a clear desk, it feels so much better and lighter than if I have paper stacked and disorganized. So I typically will try on a Friday or even on a Saturday to go and
clean my desk space just to start fresh on Monday with a brand new open area. Because again, it feels emotionally lighter. It's not just physically better and more appealing. It's emotionally freer. So simplicity in that sense, it really can play a major impact in your emotional health, not just how well you manage the day-to-day clutter in your home or office.
And then if you think about it from a financial standpoint, if you're spending money on a lot of tangible items, you don't have as much discretionary spending available for experiences or for travel. So for those families that do value simplicity, you might find more in your budgeting that you're not doing as much on the physical tangible items, but you're spending a lot more on travel or experiences.
And that's perfectly okay if that's what your value is. You also might not need to be spending as much on a home because you can make do in a smaller physical space. I find many families of three or four that are living in these very large homes that just take up extra space. They take more time to clean or you have to outsource the cleaning to someone else and pay a lot more money.
There’s something to be said for those who do value simplicity, letting that be a guidepost in the decision-making, both financially and non-financially. And then I also want to give an example of generosity. That's one of my core values as well, and for me, a lot of it is about the faith aspect. You know, as a Christian and more specifically a Catholic, we believe in tithing 10% of income.
Deb Meyer (06:39.474)
So if, let's say I'm working with a client and they say they value generosity, but they're giving maybe 5% to charities annually, and they want to be tithing at 10%. There's a 5% difference that needs to be bridged. Just having that awareness of what is the core value and how am I playing that out in the day-to-day financial decision-making is crucial.
But also recognize that if I'm taking from one category or if I'm increasing my goal in charitable giving, I need to be taking away from something else. So that's either reducing lifestyle expenses, paying off debt, or decreasing the savings rate. Those are the three other levers if you're looking to increase charitable giving.
Now generosity also can extend beyond finances. It's not just about financial dollars going to specific charitable organizations. But it really could be just making sure, especially if you have more time than money, making sure you're spending your time and volunteer efforts and really making a difference in the community around you, perhaps going on mission trips to fulfill that need for travel with your family.
And those are the kinds of things to be thinking about. Again, if your core value or one of your two core values is generosity, how is that practically playing out in those decisions that you're making today? And if you're being really honest with yourself, opening that checkbook to see exactly where the dollars are going in a given year and understanding percentage-wise, is that where you want to be or do you need to make some adjustments? If you need to make the adjustments...
What are the specific other areas that you could be changing to meet that goal? So those are just two examples, but I want you to kind of think through the framework of: what are your values? You pick five to ten core values that you think drive most of the decisions that you make. And then if you're married, also have your spouse pick five to ten core values
Deb Meyer (09:00.79)
in a separate room, no input from you, but just you each coming up with your list. And then at the end of the day, taking those two lists, deciding on one or two core values that you have in common or that you can agree are both very important, and those become your core values for the family. Those become your guiding principles when you are making important decisions or even unimportant decisions.
So when it comes to constructing that list, I do think it's important to think in terms of, you know, there are many different types of values. I'm going to give you some examples - a list of about 15 - and if any of them resonate with you, feel free to write them down. But I'll also have resources linked in the show notes that will explain additional values if you're having a hard time deciding on what some of those core values are.
Alright, so here's the list of values. Humility, gratitude, wisdom, grace, hope, faith, love, service, trust, compassion, simplicity, responsibility, honesty, tolerance, appreciation, generosity, patience, courage.
Again, those are just some examples. There are some other good resources as well. There's a 10-minute exercise you could take on Taproot or a Mind Tools resource. And again, we're gonna link to those in the show notes at worthynest.com/podcast, episode two. But again, when you think through those values,
Deb Meyer (11:04.462)
come up with your list of five to 10. If you're married, have your spouse come up with his or her own list of five to 10, and then together come up with one or two that are the shared core values that you want to have as the family values. And again, depending upon the age of your kids, their maturity level, you might wanna include them after you guys have made your decision as adults. You may want to share those same values with the kids and have them hold you accountable.
I just think about my kids and how anytime I'm trying to model good behavior for them if I'm not modeling it, they will call me out on it. And that's a good thing, right? So if you and your spouse decide, let's just say simplicity and generosity are your two core values, and you share that with your 10-year-old or 12-year-old kid, and they say,
“Why didn't you give to that stranger on the street who was asking for money the other day?” And you can have a conversation about that. Even though generosity is one of your values, maybe you don't want to just give freely to strangers. Maybe you'd rather give to a specific charitable organization, whatever the case may be. But it at least opens the discussion for passing down some of those values to your kids and instilling those same values in your kids.
If generosity is one of the core family values, make sure that when your kids are earning money or receive money as gifts, they're setting aside a certain portion to give to charitable causes or to give to others in need. It doesn't have to be an official charitable organization. So all of these are opportunities to not only grow with your spouse but also grow as a family unit and decide on how are these things shaping the decisions we're making day to day and the bigger picture goals that we're setting as a family.
Deb Meyer (13:07.346)
I would be remiss if I didn't talk a little bit about the abundance mindset as well. So we already talked a lot about family values. Now the abundance mindset, I touched on it a little bit in episode one, but I want to elaborate a little further. With the abundance mindset, you're open to the possibilities. You see opportunities in the future. You know that whatever mistakes you've made in the past or missteps, you're open to the possibility that they aren't necessarily going to define the future for you.
You can have a new path forward. For someone stuck in the scarcity mindset, a lot of what they believe is, okay, today is fixed, there's no hope of changing it. I was dealt a bad hand or some unfortunate circumstance was handed to me, I'm just going to be bitter and deal with what comes, right?
The abundance mindset looks at those unfortunate circumstances and says, okay, yeah, that's rough, but what can I do tangibly today to change the possibility that something better is going to happen in the future? So I think anytime you're talking about making a behavioral change and letting these family values guide your decision-making, you have to harness that abundance mindset and know that whatever past mistakes happened are not a script for your future.
They don't have to define your family going forward. So just having that abundance mindset, exploring the possibilities, being open to the idea that new goals can emerge, new patterns can emerge, and believing in positive behavior change.
Some of that's done through habits and we can have a whole other episode on habits. But just understanding that the possibilities are there and combining that with family values is going to be important as you go down this trajectory. All right. At the end of each solo episode, I want to go through one listener question. And since this is a brand new podcast I'm just going to start with my friend Dayna's question.
Deb Meyer (15:27.83)
It's a great one. She says, “I want to start some sort of fund or trust for the kids. I know not all four will go to college. What would be best to start so that they would have the freedom to do what they want with the investment?”
Great question, Dayna. So I wanna share a little bit of background about Dayna because I think it's gonna help in this context. And I also want to say, I'm not providing advice. This is more education. Advice would be one-on-one chatting with me about your specific circumstance. Education, that's what I'm doing here today.
So in her case, she says four kids. Now biologically, she has one child of her own from a prior relationship. She's now engaged and will have three more kids once they're married. So it will be a total of four kids in their blended family. And in their particular case, their wedding is about a year away.
They have some very big expenses coming up as a couple, an adult couple, that will need to be taken care of before they start investing for their kids. So in this particular case, I would say, funnel as much money as you can into the wedding fund (paying for the wedding, saving for the wedding, and making sure those expenses are met).
Not accruing a bunch of high-interest credit card debt to pay for the wedding, but paying for as much of it as you can in cash and making sure if you do accumulate any debt, paying off that debt quickly thereafter. And then kind of think through, okay, what savings vehicles would be good for the kids? And in this case, if some are potentially college-bound, one potential solution would be a 529 plan. There are different types of 529 plans, and we're going to go into a whole other...
podcast episode on college savings. At a high level, there's a 529 plan called prepaid and it's in-state tuition only if you know your son or daughter is going to an in-state university. So let's say you're a Florida resident and you know they're gonna go to the University of Florida or some other Florida public university. You could be putting money into Florida’s
Deb Meyer (17:52.75)
529 prepaid plan where you're paying today's tuition dollars in this savings account instead of whatever the future dollars are. This strategy works even better when you have younger kids if you're certain they'll go to a public in-state university. Now if you aren't sure where they might go to college or let's just say you're paying for some private school expenses before college,
You could do just a general 529 savings plan and virtually every state has its own rules. Again, I'll go into more details in the subsequent episode, but there are plenty of options to save for future college expenses when you're not sure if they're going to go to public or private, in-state or out-of-state. It's an ideal savings vehicle for those college expenses. And then for the kids that you know...
probably won't go to college, but if you want some other savings vehicle, you could keep it as an account in your name and just kind of earmark it for a special purpose. Or you could open a UGMA account or a UGMA account. In both of those cases, they're essentially custodial accounts that you as the parent would own before the child reaches the age of majority. But then once the child reaches that age of majority, they have access to the funds in that account.
So let's just say you open a UTMA and buy a mutual fund and you buy it for $10,000 today and it grows to $20,000 by the time they reach the age of majority. And let's say they have access to that and they wanna use all $20,000 immediately for something, whether it's good or bad, they have to still pay capital gains tax.
But with a 529 where you're doing college savings, there are some tax advantages to that if you're pulling it out directly for college expenses. So it's really important to think through what the ultimate purpose of the account is and what the eventual goal is for those funds, when you want the child to have access to it, all of those kinds of things. With the 529 plan, you could be owning an account for the benefit of your child for a long time, even if they get to be into their...
Deb Meyer (20:14.878)
mid-20s, you could still have ownership of that account and they don't necessarily need to know the balance. Whereas with a UTMA or UGMA, once they become the age of majority in the state you're living in, then they have access to those funds immediately. So they might not spend it wisely. They might be a little foolish with it if they are, you know, 18 or 21, again, depending on the state, and have access suddenly to this big pot of money.
All right, that's some food for thought, but I hope that was a good question for you guys to ponder as you're thinking through your own savings decisions. Please go to worthynest.com/podcast. You can access episode two and see all the show notes. And please don't forget to subscribe if you're enjoying the podcast. It's new and we want to make sure lots of people find it. Thanks and have a wonderful day.