Personal Financial Information
This collection of personal financial information is directed to works for a
living. Everyone needs to know more about financial matters. The SOURCE
for much of this information is the GSA Consumer Information Catalog published
by the Federal Citizen Information Center.
THE BASICS OF MONEY MANAGEMENT SOURCE
PERSONAL PLANNING, VALUES, GOALS, AND PRIORITIES
At the conclusion of this lesson you should be able to:
1. Determine your values,
what the most important things are to you.
2. Understand the steps
in the planning process.
3. Establish realistic goals
and write them down.
priorities for your goals; i.e. put first things first.
Financial success seldom happens by accident. And it seldom happens
overnight. Those who are able to achieve their financial goals in life — even
those with relatively little income — usually have identified their specific
goals and then have developed a plan that will help them achieve their goals
Even though you may feel overwhelmed at this point, remember that you CAN
develop a financial plan for yourself that will help you to achieve your goals.
Your financial plan doesn’t have to be complicated, sophisticated, or require
the help of a professional. You don’t have to earn a lot of money to have a
financial plan. Your financial plan can be as simple as finding a way to live
within your income, pay your bills on time, and maybe save a little bit of money
It is helpful to think of your road to financial recovery as just that — a
journey. Your financial success is the destination of your journey, and your
financial plan is the road map that will get you to that destination. Before we
talk about how to develop your plan, it is helpful to explore some other facets
of your life that can either speed up or slow down your journey to financial
success. Just as you have many small and large choices that you must make in
preparing for a trip, you will also have many choices to make in developing your
successful financial plan.
Why are values important to a successful financial plan?
We value the things we think are important. In a time of hard financial
choices, you have to re-examine the things you really value in life and decide
to spend your money only on the things you value most. If you are not careful,
you may end up devoting all your time, money, and energy to the immediate crisis
and neglecting other things that are really important.
One way to help you decide which of your values is the most important is to
set priorities. Completing the activities below will help.
Values Activity #1 — Values
1. List your additional values in the “Values” section on the
2. Rank them in their order of importance to you in the “Priority
Order” section on the right.
For instance, if both financial health and mental health are
important to you, which one would you choose to address first if you had
to make a choice?
• Rewarding Career
• Financial Health
• Mental Health
• Spiritual Health
• Physical Health
• Family Relationships
Values Activity #2: “I Won the Lottery”
What would you do if you won the lottery? Name the first three
on which you would spend your money if you won the lottery:
Did you find that the items you listed here reflect the values you
listed in Activity #1? How much time, money and energy is spent on your
first priority? Where are you spending most of your resources?
ACHIEVING BALANCE BETWEEN VALUES
You often find that you have to make difficult choices between values when
they compete with each other for your time, money, and energy. When values
conflict with each other, success in one can cause you to have to compromise
another. For instance, if you value your work and your family highly but your
job demands that you spend a lot of overtime, a conflict could arise when that
overtime at the office takes quality time away from your family.
The trick is to be able to balance your values so that they complement each
other. This means that achievement in one promotes achievement in the other. But
how do you achieve this balance in the real world? The planning process will
help you achieve this balance because you will take all of your most important
values into consideration when you develop your financial plan.
The values you have listed will be reflected in the goal(s) that you have
set for yourself. You may well find that you have more than one goal that you
want to pursue. That can be built into your plan. But just as you have set
priorities with your values, you will also need to set priorities with your
goals. We will talk more about the planning
process later in this lesson, but keep the importance of planning in mind as
you read more about values.
WANTS VS. NEEDS
Values Activity #3: The Difference Between Wants and Needs
Where does most of your money go? Does it go to “wants” or
What food do I like?
What clothes do I want to be in style?
What kind of car can I drive to make people think I'm
What kind of home will impress people?
What food do I need to stay healthy?
What clothes do I need for work or recreation?
What transportation do I need to get to work?
What housing meets my basic needs?
Examine the lists below. Have you ever thought you really need anything on
Food – Clothing – Shelter – Good Health – Love
Basic Needs for Work/Employment
Health care – Work skills – People skills – Transportation – Support
from family – Stable home life – Enthusiasm for work – Good credit history
Car phone – VCR – 4WD Vehicle – Big house – Designer jeans – Boat –
Sports car – CD player – Fancy sound systems – Truck – Fitness equipment
– Whatever friends have – Vacations – Swimming pool – Credit cards –
Whatever is advertised
The basic needs of life are quite simple. What good are the “wants”
if we don’t enough
money for the basics of food, clothing, and shelter?
THE REAL VALUE OF MONEY
HOW MUCH IS MONEY REALLY WORTH?
Money in and of itself is not worth much. The value of money is only a
function of how it fulfills your own wants and needs. Some people have sold or
given all they had to the poor. Others have spent their entire lives in the
pursuit of wealth and power and have become rich. The true value of money to you
probably lies somewhere in between these two extremes. The value of money is
only a function of how it fulfills your own wants and needs.
“Money can’t buy you …”
Money can’t buy you many of the things in life that most people value most
Love — Many people try to fill this emotional need by
Happiness — If money could take away loneliness, rich
people would not be lonely.
Security — If money could give real security, no one
who is wealthy would ever feel insecure.
Prestige — People you recognize as having power or
position in your community aren’t always those with the most possessions.
VALUES, GOALS, AND PRIORITIES
WHAT YOU WERE TAUGHT
What you think about money is shaped by the way you were brought up and all
the experiences of your life. You probably heard both positive and negative
messages about money when you were growing up — sometimes even from the same
person. Knowing how these messages affect us today is important to understanding
why we make, spend, and save money as we do.
Values Activity #4: Money Message
Take a moment and write down the answers to these questions.
• What messages or “sayings” about money did you hear from
grandparents, aunts, uncles, or other significant persons in your life?
• What did they say about money — making money, spending money,
saving money, etc.?
• What didn’t they say about money?
After we become adults, some messages affect us more than others. What
messages did you receive about money as a child which might be affecting your
spending decisions today as an adult?
These impressions come from different sources and can affect the way we feel
about money. For example, your concepts of money might be influenced by being
the oldest or the youngest child, or an only child. What we learn in childhood,
including our attitudes about money, becomes firmly set by the time we are
adults. The same is true about differences in our personalities and upbringing.
All of these factors affect our spending habits and, in turn, impact our
COMMUNICATING MONEY ISSUES
Communication is important to your money choices because the financial
choices you make affect not only you, but also other people. Communicating your
feelings about money and your financial objectives with others who are part of
your life — your family friends, employers, business associates, and your
attorney — is critical to your personal financial success. Just as we learn
our attitudes about money as children, we also learn to communicate —
particularly about money — in childhood. Did your parents, for instance,
“never talk about money in front of the kids?” Did one of your parents hide
his or her spending behavior from the other? Did your parents argue about money
because they disagreed about how it should be spent?
In the best of times, communication can very easily become confused; in the
worst of times, it can be almost impossible. You may have heard the Abbot &
Costello comedy sketch about “Who’s on First.” This is a funny exchange
because the two people are not communicating. A few simple “listening
techniques” will help you be better able to communicate your concerns about
money, your financial objectives, and your financial plan to others who may be
directly or indirectly involved in your financial affairs.
Here are some simple techniques that you can use to improve your
communication about money or any other topic of importance in your life.
Be clear about what you want to say before you attempt to explain
Identify the issue you want to discuss with the other person and make
understand it before you begin your discussion.
Don’t jump to conclusions.
Stay on the topic.
Ask the other person if they understand the meaning of what you are
Tell the other person what you think they are trying
to say to you.
RELATIONSHIPS AND MONEY
In relationships, we are often attracted to opposites. We often seek out
other people to make us feel more complete. Each person comes to a relationship
with his or her strengths and weaknesses. However, these in turn can turn into
power struggles. It then becomes hard to determine whose way is the “right
way” to handle finances. There may be no “right way” to handle finances,
but people who live and work together can find the “best way” to handle
their finances by communicating their own feelings about money to each other.
Values Activity #5: Personality Types
Study this list of personality types, which might be said to be
“opposites,” then fill in the spaces to the right.
Risk Taker or Conservative
Saver or Spender
Worrier or Happy-Go-Lucky
Detail Lover or Big Picture
Which One Are You?
Which One Describes Your Most
Significant Family Member
There is usually a “gap” in the thinking of individuals who are
opposites. The goal of communication is to build a bridge between people, to
“bridge” this gap so that they can work together to achieve each of their
Defining the “type” of your partner will allow you to discuss financial
matters from his or her perspective, not yours. This technique will facilitate
Emotions and Money
Do you think that feelings or emotions affect the way you spend money? Ask
yourself if you are spending your money on the things that are really important
to you, or whether you are spending money for other reasons, such as these:
Have you ever felt deprived and angry when you didn’t have enough of
what you really wanted for yourself?
Have you ever spent money you didn’t have on “bargains” thinking
that you were saving money?
Have you ever used your credit cards to buy things because you didn’t
have enough money to pay cash for them?
Do you control your money or does your money control you? Here are emotions
which may have affected your spending at some time in the past.
Have you ever been angry with someone so you spent money just to “get even?”
Have you ever felt guilty about neglecting someone so you bought them a gift to
make you feel better?
Have you ever bought something just because someone you know had one just like
it, not because you really needed that item?
Have you gone to the mall when you were feeling down, or have you spent money
you didn’t have because you thought buying yourself something would soothe
Have you decided to celebrate something good that has happened to you by
purchasing a wanted but not needed big ticket item?
Have you ever gotten off work and avoided going home because no one was there?
Did you then go shopping so you wouldn’t have to be alone?
Values Activity #6: Values and Goals Questionnaire
Answer the following questions: If you live with others, think about
how they might answer. Ask them to answer these questions, too. You may
be surprised at what you will learn about each other.
• What are your greatest fears about money? What do you think
might happen if you don’t have enough?
• What money topic often starts an argument within your family?
• If you had to cut back on spending, what would you cut? How much
could you save?
• If you suddenly had $10,000, what would you do with it?
• What was the poorest choice(s) you ever made about money? Why?
• How has your attitude about money changed from childhood, or in
the last three to five years?
• What kind of things are a pleasure to buy?
• What kind of things are not a pleasure to buy?
• Do you think you are too tight with money, too free with money,
or about right with your spending habits?
• If you wanted to save money for some things that are important,
what would they be?
THE PLANNING PROCESS
Now that you have a better understanding of how your values affect your
priorities, how your priorities affect your spending choices, and how your
spending choices are affected by your attitudes and beliefs, you can start to
identify your financial goals. When you have a clear understanding of your
goals, then you can start to develop your plan to achieve them.
You can regain control of your financial life, establish financial
security, and achieve your own personal goals and dreams. For instance, imagine
yourself debt free, living within your income, and saving money. This is a
We talked about using the planning process as a roadmap that will help you
reach your goals. Identifying your wants and needs is like putting up the
various traffic signals that will help you get to your destination without
having an accident.
FOUR STEPS IN THE PLANNING PROCESS
1. Assess needs
2. Set goals
3. Make a plan
4. Take action
Step #1. Assess Needs
Evaluate your current financial situation. In this step, take a broad look
at the way things are now. Ask yourself these questions:
What are my basic needs?
What else do I need?
Do I really NEED it? Is there an alternative to buying it now?
What else do I want?
Why do I want it?
How would life be different if I had it? What would change if I had it?
Make a list of wants and a list of needs. Go back to Activity
1. Do the lists agree with your values and priorities?
Step #2. Set Goals
A goal is a specific result you intend to work toward. A realistic goal is SMART:
Specific — Set specific goals which you can clearly name.
For example, save money to get a new refrigerator — not just to save money.
Measurable — Measure goals by the time and/or money it
will take to attain them.
Attainable — Make sure goals are reasonable
and possible. For example, “I know I can save X dollars each week to reach my
goal within six months.”
Relevant — Make sure your goals fit your needs.
Time-related — Set a definite target date. For example,
“I must save enough to purchase a new refrigerator within six months (by
___month, ___day, ___year).”
Now, list the results you are working toward. Examples of goals could be as
• “By _____(date) I will have paid off my _____________________.”
• “By _____(date) I will have saved $_____(specific dollars) for a trip to
• “By _____(date) I will have
• “By _____(date) I will have
• “By _____(date) I will have
• “By _____(date) I will have
• “By _____(date) I will have
• “By _____(date) I will have
Step #3. Make a Plan
Imagine the actions or steps you need to take to get from where you are now
where you want to be. The more steps you can visualize, leading from where you
to where you want to be, the more likely you will be to reach your goal.
Once you can truly “see” the actions you need to take to get to where
you want to
be, write down everything needed to accomplish each of these actions. Be sure
think about the money, time, energy, people, and information that will be
Next determine the best order for the steps you should take. What do you
have to do
first, second, third... last? Try to foresee possible roadblocks to reaching
but don’t let these roadblocks discourage you. Thinking about them now will
you the opportunity to prepare for them before they happen.
1. _________________________ _____________________ ___________________
2. _________________________ _____________________ ___________________
3. _________________________ _____________________ ___________________
4. _________________________ _____________________ ___________________
Step #4. Take Action
Take the first step. Many times goals are not reached just because the first
step was never taken. Just having a plan doesn’t mean you will reach
your goal. You must actually take the actions listed in your plan.
Keep on keeping on. When you encounter obstacles, persistence wins more
often than talent. Place reminders or pictures of your goals where you will see
them every day. This will remind you of them as you make financial choices.
Financial success is usually a result of consciously deciding what we really
want and need and making a realistic plan to achieve these things. In order for
us to get what we want or need or help someone else to get what they want or
need, we have to have a clear understanding of our values. Our values affect our
priorities, and our priorities affect our spending choices. All along the way,
our background, training, relationships, emotions, and communication all
influence the choices we make about our goals, priorities, and spending.
Whenever you spend money for anything, you are making a decision, even if it
is a small one. Before you take out your wallet, remember what you value most in
life, what goals you have already
decided you want to achieve and when, and the plan you have made to achieve
You may even forget once in a while and spend money without thinking. If you
do, it isn’t the end of your plan. But you do need to assess how that
thoughtless expenditure has affected your plan. Then, adjust your plan so that
you can get back on track right away. We will talk more in the next chapter
about just how to spend your money so that your daily spending keeps you on
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