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January 2022 Newsletter - Financial Purpose Statement

January 2022 Newsletter - Financial Purpose Statement

January 11, 2022
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Focus on the future as it's really bright! - Tim Urban Image

Dear First Mates,

Happy 2022! The new year is a perfect opportunity for each of us to reflect on things that matter most. These things include our values, priorities, goals, and wishes for the future. How does this reflection impact your financial decisions? A Financial Purpose Statement may help align your life values with your financial values. So, what exactly is a Financial Purpose Statement?

A Financial Purpose Statement is a simple statement that crystallizes the purpose of money in your life or the lens through which you view your financial life. I hope that taking the time to create one will help you:

1. Make wiser spending decisions

2. Use money to live more intentionally

3. Bring clarity to your goals

4. Live a happier life

Reminding yourself of your values and solidifying your goals will help you minimize the regrets you could have later in life. In her book, The Top Five Regrets of the Dying, former palliative caregiver, Bronnie Ware, details the most common regrets people felt right before they passed away. The top five regrets included the following:

1. They lived the lives others expected of them rather than being true to themselves

2. They worked too hard

3. They didn’t tell others how they truly felt

4. They didn’t stay in touch with their friends

5. They didn’t allow themselves to be happier

Look - I don't want anyone to have regrets in life so let's take some time to uncover what matters most. An insightful exercise to reveal what we value is using Personal Value Cards. These 100 values should be reviewed one by one and ranked in the following five categories: (1) Not Important, (2) Somewhat Important, (3) Important, (4) Very Important, and (5) Most Important. Once you review each value, please write down your top 10 highest-ranking values.

While I'm sure these values will change over time, here's mine (alphabetized): 

1. Contribution

2. Family 

3. Friendship 

4. Fun 

5. Generosity 

6. Humor 

7. Independence 

8. Knowledge 

9. Service 

10. Wealth   

With that exercise complete, you are now ready to create your personalized Financial Purpose Statement. Please finish the following sentence:  

Money’s purpose in my life (our lives) is to ______________________________.

Here’s mine: Money’s purpose in our lives is to enable our family to live to the fullest through shared experiences, bring good in the world, propel humanity forward through wise investing, and leave a legacy to future Warshaws. 

Since this is personal to you, it can be as short as a sentence or a full paragraph. If you are stuck, here are a few other examples:

  • Money’s purpose in my life is to support a calm, fulling, and enjoyable lifestyle.
  • Money’s purpose in my life is to live fully and contribute generously.   
  • Money’s purpose in my life is to provide security and stability to my family.
  • Money’s purpose in our lives is to enable us to fulfill our spiritual mission on Earth and raise ethical children.
  • Money’s purpose in our lives is to allow us to share experiences together, as a family.

Additionally, if you are interested in money psychology, here are some book suggestions:

1. The Happiness Hypothesis by Jonathan Haidt

2. Mind Over Money by Dr. Brad Klontz & Dr. Ted Klontz

3. Conscious Finance by Rick Kahler and Kathleen Fox

4. Wherever You Go, There You Are by Jon Kabat-Zinn

5. Find Your Why by Simon Sinek

6. Happiness Studies by Tal Ben-Shar

7. Your Money, Your Values, & Your Life by Derek F. Hagen

In conclusion, crafting your Financial Purpose Statement is a great exercise to kick off 2022. Ultimately, money is simply a means to a much greater end. If you are comfortable, I invite you to share your statement with me to add to your financial plan. Heck – I would even encourage you to laminate it and carry it around with you. I hope that it serves as a North Star to guide your financial decisions. So I ask you, what is your Financial Purpose Statement?  

P.S. I’d like to personally thank Derek Hagen – founder of Money Health Solutions, a financial therapy and life planning firm for writing an amazing blog post on Kitces.com, which inspired this newsletter. After reading it, I was so inspired that I met with Mr. Hagen over Zoom to discuss how his services can help my clients.