Live Life to the Fullest – Create a Dream and Life Values Based Approach to Personal Finance – Part 1 – Determine the Purpose of Money in Your Life

Perhaps one of the most memorable movie quotes (to me personally) was the quote by Morgan Freeman in “The Shawshank Redemption” when he said, “Get busy livin’, or get busy dyin’. That’s damn right.” I really like this quote because when you think about it, life is really too short to not live it to the fullest.

As I was recently reading David Bach’s book, “Smart Couples Finish Rich,” I found it very interesting to learn about the personal finance strategy that he adopts with the people he advises in his financial planning business. He calls his strategy a “Purpose Focused Financial Plan”.

Essentially, what the strategy is all about is that people/couples should plan for their specific values and life dreams, as opposed to planning what material possessions are needed for life (can be easily influenced by contemporary culture).

Take a moment and reflect on that statement. There is a big difference between the two when you stop and think about!

Note: I would highly recommend picking up a cheap ($0.01 + shipping) used copy of David’s book at Amazon.com. Just click on the link below!

Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner

This posting series will chronicle my journey to discover and create this Purpose Focused personal finance strategy and strive to give you all advice from my learnings that you can adapt to your situations.

Step 1 – Determining the Importance of Money in Your Life

The first step to creating this system for yourself is to ask yourself the simple question, “How important is money in my life?”

After really thinking about this for 5-10 minutes, rank the importance of money in your life on a piece of paper, using the scale of 1-10. A score of 1 would indicate that you believe that money is the root of all evil, and a score of ten would mean that you think money is the most important reason for living.

Next, if you have a partner/spouse, rate and record how you think he or she feels about money, using this same scale.

This simple exercise is a great way to get the creative juices flowing to drill down to what you believe is the true purpose of money in your life.

Step 2 – Determine the Purpose of Money in Your Life

Having ranked the importance of money to you, it is now time to search your soul a little and verbalize exactly what you feel is the purpose of money in life.

In Bach’s book, I believe he skips over this exercise too quickly (he goes straight to listing your specific life values. That will be the subject of part 2 of this series). I feel that is very important to have a good grasp in your mind how you feel about money in general.

To get you all thinking, I will ask some rhetorical questions – do you feel money helps you to buy things? does it help provide you security? the freedom to travel? the ability to attract people to you? to give you power? to give you recognition?

Now, record on your piece of paper what you are thinking!

My Results from Steps 1 and 2
After thinking about it for a while, I came up with that money is a “7” on the 10 point scale of how important it is to me in my life. How did I come up with that ranking? It basically all comes down to the purpose of money in my life.

To me, money is very similar in importance to blood. Someone once said that blood is very necessary for life, but it is not the purpose of life. I feel that money is very similar because it is unmistakenly necessary for people to do what they want to experience in life, but it is not the purpose of life.

Give this quick exercise a go, and let me know if you have any questions.