Purpose, what a powerful word. We can use it to describe something important that we are doing, or intend to do, or when referring to the strength of motivation we have behind an action. But “purpose” is also a great way to think about the act of proper planning and carrying out your plans to achieve your financial goals. Let’s go a little deeper and look at the roles of purpose in your financial life from these three angles.
“I’m very purposeful about saving for retirement”
Is there something in your financial life that you feel you have a pretty good grasp on? It could be saving for something specific, like retirement or holiday spending, or maybe an upcoming family vacation or trip with friends. Maybe it’s your dedication to having your bills paid on time each month or quarter. The role of purpose here is to indicate a sense of importance in this part of your personal financial life. To be clear, it’s not innate to the activity, it’s that you’ve decided to give it the level of importance it has. In other words, you’ve chosen this activity to be purposeful about because you’ve deemed it worthy of the special treatment.
When we decide to be purposeful about our personal financial lives, we place special importance on setting goals, planning to reach them, and carrying out those plans. A strong structure comes from clarity of purpose in this way, as does the ability to make decisions that support, not hinder, those plans.
“I spend money as if it was my purpose!”
Someone once told me that they spend their money as if it was their purpose. A cheeky way of explaining that they were excellent at the spending of money, but not so great at the planning or saving parts. But there was something very important that came across in the phrasing. The description was enthusiastic, energetic, and eager – all of which speak to motivation.
Motivation in your personal financial life is a very powerful thing indeed, but it needs to be aligned with your values. So, if you are spending money “as if it was [your] purpose”, and that spending is hindering the realization of your value goals, like paying your bills, saving for a home, or investing, a realignment is in order. The spending is not the problem, what is spending if not the trading of money for something valuable to you? Once you’ve aligned the spending with the plan for achieving your financial goals, spend with vigor, and save with vigor too! Progressing with purpose toward realizing your value goals? That is truly motivating!
“I earn, spend, and save money as part of building and living the life I want”
This third role of purpose is about having a handle on the holistic picture that is your financial life. In this role, purpose indicates the action is part of something greater than itself, a larger mission or bigger picture. Someone diverting 10% of their pay to the company 401K plan, a young person with some of their allowance money in index funds, a couple choosing the 15-year mortgage over the 30-year option. These are just some examples of moves that are in support of the bigger plan. Make no mistake, money is for buying what you want. That statement is true if you spend your money on a night out with friends, a family vacation, an investment property, stocks, bonds, or anything else. It’s defining what you really want out of your financial life that makes the difference. Establishing the plan for getting to that value and making decisions that are supportive of making those goals your reality is where truly purposeful progress is made.
If you'd like to receive new blog posts in your inbox you can sign up for our YWC mailing list using the button below. Also, if you think financial coaching might be right for you and want to discuss a potential coaching engagement, you can book a no-cost Intro Session using the form at the bottom of this page.
Comments