Money and Values

The concept of money is deeply personal and is influenced by….

experiences

values

goals

fears

There is no universal “right way” to _____ your finances, but you need to understand your ________ with money so you make decisions that align with your _____ and _____

manage, relationship

values and goals

The management of an individuals financial decisions, including budgeting, saving, spending, and planning for the future

Personal Finance

Fundamental beliefs that shape and influence behaviors and decisions

Values

Fundamental beliefs that shape and influence financial behaviors and decisions

Financial Values

What forms and influences your values?

Family Influences

Economic Conditions

Media and Social Media

Cultural and Societal Influences

Family Influence

First learn as children from primary caregiver

Economic Conditions

Expansion

Contraction

Inflation

Job Market

Stability

Media and Social Media

Influence your perception of wealth and success

Cultural and Societal Influences

different cultures have distinct beliefs and practices

The distinct patterns or tendencies in how individuals perceive, interact with, and manage their finances

Money personalities

Money Personalities Include….. (Not Fixed)

Saver

Spender

Investor

Balancer

Avoider

Prioritizes accumulating money

Seeks security and stability

Regular Saving Habits

Saver

Saver Behaviors

Focus on saving

shop best deal

emergency fund

save for significant purchases and retirement

Saver Challenges

May deprive themselves of comforts or activities they can afford

Anxiety over spending money, even on well researched purchases

Saver Strategies

Set aside a “Fun” fund for guilt-free spending on personal enjoyment

Person who enjoys using their money to purchase products and experiences without much hesitation

Spender

Spender Challenges

financial stress from over-spending

potential debt

Spender strategies

implement budgeting

prioritize savings with each paycheck

Use debit cards to control spending

Someone who focuses on using their money to make money

Investor

Investor challenges

high risk can lead to significant loss

Investor strategies

evaluate risk vs reward

pursue knowledge

develop a disciplined investment strategy

someone who takes a moderate take/approach to finances; careful management to maintain financial health

Balancer

Spender Behaviors

seek immediate gratification

less concern for saving

may rely on credit cards- leading to financial stress

Investor behaviors

allocates money to investments (stock, bonds, real estate)

embraces risk for financial growth

someone who takes a moderate take/approach to finances; careful management to maintain financial health

Balancer

Balancer Behaviors

thoughtful planning

decision-making aligned with immediate and long-term goals

Balancer challenges

analysis paralysis

indecision

missed opportunities

Balancer strategies

focus on balanced planning

avoid overthinking decisions

someone who tends to shy away from dealing with money matters due to lack of understanding or fear of confronting financial reality

Avoider

Avoider behaviors

lack of interest

fear of mistakes

avoid financial management

Avoider challenges

interference with financial stability and growth

Avoider strategies

engage in financial education

a social science that studies how psychological and cognitive factors influence economic decisions, challenging the assumption of the rational choice theory in traditional economics

Behavioral Economics

further investments are justified on the basis of previously incurred, unrecoverable costs; get your moneys worth

Sunk Loss Fallacy

discomfort of something losing value, is perceived as greater than the pleasure derived from it gaining in value

Loss Aversion

individuals make decisions through rational calculation to maximize self interest, based on preferences, constraints, and avaliable information

Rational Choice Theory

catorgorize and treat money different based on origin or intended purpose

Mental Accounting

more value ascribed because of ownership

Endowment effect

undue emphasis on first piece of information

Anchoring bias

mimic others behavior and override your own judgement

Herd Mentality