Getting started on the road to financial happinessGetting Started

The road to financial happiness begins with identifying what you value most in life. Studies have found that people find happiness when they work for goals that are consistent with their values-even if the effort involves some short-term pain. This applies to your money goals as well. You will find greater well-being if your earning, saving and spending reflect your highest priorities.

So how do you figure out what you value? Do the following:

1. Off the top of your head, write down the ten things you value most. They may be people, activities, things, or abstract qualities, such as freedom or creativity.

2. Now find a comfortable, quiet spot to dream. Envision your ideal day, in full detail, from sun up to sun down. Where do you live? Who do you live with? What kind of work would you do if money were no object? Think about what you love doing; what comes naturally to you; what's meaningful and pleasurable; what skills or abilities others have recognized in you. Where do you work? Who do you work with? What's the work environment like? How do you spend your time off? Who do you spend it with? List five to ten adjectives to describe your life. List the five to ten things you value most about your ideal life.

3. Now, let's look at your real life, in full detail, from sun up to sun down. On a sheet of paper, make two columns: On the left, list all of your activities today, on the right, the reasons you did these things. Here's an example:

Activity Reason for Activity

Now interrogate each of your reasons. For example:

Why did you get up, shower, dress, and drive to work? Because I have to go to work.

Why do you go to work? Because I enjoy my work.

Why do you enjoy your work? Because it offers a chance to do things I'm good at in a fun environment.

We've just identified some values: the opportunity to use your skills in a fun environment. We could ask further questions to explore what's particularly fun about the environment, and we would discover more values. When you are thinking about how you spend your time, pay close attention to your physical response, to what your gut tells you. Do you feel a rise in energy, a sense of satisfaction when you meditate on your daily activities, or a feeling of dread, a sudden weight on your chest?

Go through this exercise and identify five to ten values reflected in your daily activities. Then compare that list to the other lists you created in steps 1 and 2. Do any of the values overlap? How close is your real life to your ideal one? If there's no overlap, you may want to review the list of daily activities again, and see if there is a way to make choices that accommodate more of your values. For instance, let's suppose you responded this way:

Why do you go to work? Because I have to make money.

Why do you have to make money? To pay my bills.

Why do you have to pay your bills? Because I need to be responsible for myself.

You've just identified a value: responsibility. But in this case, you may want to question if working at this particular job is the best way to serve that value. Maybe you can make other choices. Maybe you can reduce your spending, so your bills are lower. Then you would have the opportunity to take a job that pays less but is more satisfying-and still pay your bills and be responsible. A different vocation might accommodate some of your other values, along with responsibility.

Also, look for what I call "values gaps" in your lists - a gap between your behavior and the goals related to what you say you value. Let's say you value owning a home, and would like to buy one in the next seven years. If you haven't begun saving anything for the downpayment, and are racking up credit card debt, there's a gap. Your actions are not serving that value. Are you sure it's a priority? Then act on it! Here's how to put your values into action:

Once you identify your values, set specific goals related to them. Let's say you value independence and security. A related goal might be saving enough for retirement so you don't have to be dependent on someone else in your old age. Once you've tied the value to a financial goal, figure out how you will achieve it by creating action steps, attached to specific time frames:
Save Money to Retire

1. Set a long-term goal: Save enough money to retire comfortably.

2. Set a medium-term goal: Save $150,000 for retirement by age 40.

3. Set a goal for this year: Save the maximum percentage of my salary in my company's 401(k) plan, or, if my firm doesn't offer a plan, put the maximum possible in an Individual Retirement Account.

4. Set a goal for this month: Buy a book or get one from the library that explains how to save successfully retirement (see Money & Happiness, chapter 7). Or visit a financial website (see the list of resources under the "Get Money" tab). Review all the investment options offered by the company plan and choose three. If your firm offers no plan, open your IRA with a mutual fund company.

5. Set a goal for this week: Sign up for the plan; or call the mutual fund company and get the forms to sign up for your IRA.

Identifying your values, setting specific goals and taking action are the first three steps on the road to prosperity. As you get your money house in order, you will find a stronger sense of financial well-being.

Road to Financial Happiness

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Adapted from Money & Happiness, © 2005 by Laura Rowley
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