The current environment has many Americans feeling like they must prioritize certain financial needs and make difficult choices, potentially at the expense of their personal values
According to a new survey by diversified financial services leader Thrivent, the current environment – including mounting concerns over the economy, fear of recession and high levels of personal debt – has many Americans feeling like they must prioritize certain financial needs and make difficult choices. This potentially comes at the expense of their personal values and how they may otherwise prefer to use their money. Many Americans believe drastically increasing their income is a way to bring their financial decisions in closer alignment to their values: 42% of Americans said they’d need 21-60% more income to bring their financial decisions closer to their values, and 22% said they’d need 61-100% more.
Thrivent’s 2023 Financial Crossroads Survey found Americans would prioritize:
- Taking a job working harder and longer hours to make and save more (53%) over making less, but having more free time to do what they love (47%)
- Saving for their children’s college (56%) over saving for their own retirement (44%)
- Investing bonus money for the future (73%) over splurging on a vacation (27%)
- Saving for their own retirement (75%) over funding their parents’ extended care (25%)
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Furthermore, many Americans would choose to pay off their debt (42%) if they received an unexpected large sum of money. In fact, these options far outweighed the other choices presented to them, like investing for the future (22%), making home improvements (6%), traveling and experiences (5%) or donating to a charity (3%).
“Many people expect this period of financial uncertainty to continue, and their fears could be getting in the way of making financial decisions that reflect their intention and values,” said Loren Hansen, vice president of Thrivent Advisor Groups. “Increasingly, we’re seeing a need for purpose-based financial advice that helps people manage their money in the present and allows them to consistently connect those decisions to their main purpose and guiding values.”
The survey found Americans would like to bring financial decisions closer to their values if they could. In fact, most Americans (65%) say their values are important to them when making financial decisions, yet 71% feel like their decisions only sometimes or rarely align with their values. According to the survey, Americans regard their family (76%), health and wellbeing (57%) and financial stability (39%) among their top three values, and it’s likely they want to prioritize money decisions with these themes in mind.
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Purpose-based financial advice can align financial decisions to values
Thrivent believes the financial advice journey should begin early to connect financial decisions to values. Here are five tips for people who want to start integrating their finances with their values:
- Seek initial help – Before thinking about how to bring financial decisions closer to values, a critical first step for people may simply be to improve their financial position by adopting healthier budgeting, saving and spending habits. For example, a money coach, like Thrivent’s complimentary Money Canvas program, can help people better understand their cash flow, manage spending and trim finances.
Running through a budgeting exercise may give people additional breathing room in their finances so they have bandwidth to start thinking about money and values in a more intentional way. - Develop financial goals that reflect values – Once people have a grasp on their current money habits, it’s a great time to meet with a financial advisor. This is an important relationship throughout life: a financial advisor is a key partner who can help people articulate their financial goals and integrate values into everyday financial decisions.
A good financial advisor will dig deep by asking thoughtful questions about financial priorities in the short- and long-term. For example, they might ask someone: Are there areas of your finances that you feel need immediate attention? Imagine it’s 10 years from now and you’re looking back at all that you accomplished – what do you see? Looking further into the future, what would make you look back and say you lived a great life? These questions go beyond a dollar amount and get to the heart by figuring out what resonates deeply with a person and their loved ones.
As a result, these questions unlock values. People may connect their responses to things like family, faith and community, or even something more intangible like balance, growth or stability. This is a crucial part of financial planning that often gets missed, but it’s helpful in highlighting what matters most to people and tying it back to their financial goals and decisions. - Integrate values into the financial picture – A financial advisor can help people bring their values, goals and financial decisions all together to form a complete picture. For example, if someone said their values are “family” and “education,” a financial advisor can match those to a concrete goal – like sending their child to college in 10 years – and then outline steps to achieve it. Perhaps it’s something small to start, like setting aside $50 per month in a 529 savings account to get a head start on college tuition. With the power of compound interest, that money could grow to a sizable amount in 10 years.
- Have a written plan – Goals have more staying power if they’re written down on paper as part of a financial plan. It helps people evaluate their progress, celebrate successes and identify gaps they need to solve for. A financial advisor is an important accountability partner to help people stay on track and ensure their financial decisions continue to stay aligned with values.
- Act on your goals – Once equipped with a plan, people can start to act on their goals. As they begin to see progress, they’ll also see their values at work through their everyday financial decisions. Small steps matter, and if they’re able to do that across every financial goal, the impact over time can be substantial and make a meaningful difference in their overall financial picture.
The findings from Thrivent’s survey reveal a huge opportunity to help people through purpose-based financial advice. While today’s economic environment presents many challenges, a financial advisor can help people take meaningful steps to connect their financial decisions to their values. This important relationship sets the stage for having thoughtful conversations about what matters most to people throughout their lives, tying it back to specific goals and executing a financial plan that keeps those values at the center.
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