There’s a difference between someone asking you “what is your money for?” and someone asking you to put eight things in order, no ties allowed. The first question is easy, you can answer with a few words and feel good about your answer. The second is much harder. All of this relates to understanding your money mindset and how you think about financial priorities.
The exercise is this: take eight things and force-rank them. Each one has to sit at a different position in your list. Ties are not allowed. The discomfort of having to choose between two things you’d rather call equally important turns out to be the entire point.
The eight values are:
- security
- freedom / optionality
- experiences
- supporting family
- future creative work
- generosity
- status / recognition
- future family of your own
That’s it. Sort them.
My list, briefly
I’m not going to put my full ranking here. The point isn’t for anyone to copy mine. But a few items are worth mentioning.
Freedom / optionality is at the top. This is essentially what Charlie Munger meant when he said “I did not intend to get rich. I just wanted to get independent.” Freedom is the value that’s quietly driven most of my decisions for the last decade. Choosing student housing over comfort, working part-time jobs to be financially independent of my family by my final college years, living in shared houses for more than ten years without thinking it odd. Freedom for me isn’t a luxury. It’s the operating system underneath everything else.
Status / recognition is at the bottom, by a wide margin. I’ve worn the same clothes for fifteen-plus years. This wasn’t frugality by default; it was an ethical position I’d held since I was old enough to have one. The world has too much inequality in it for displaying wealth to feel okay to me. I’m fairly sure this position isn’t going to change, which makes it one of my more reliable financial assets, lifestyle inflation driven by status will probably never be my problem.
The exercise forced me to admit that even when things feel close, they aren’t actually tied. Once I sat with it long enough, an order emerged.
Two more questions
The exercise has a second part. Two questions, slightly different from the ranking:
What would you absolutely not sacrifice for money? What’s so important to you that you wouldn’t give it up for a better salary, a bigger opportunity, a cleaner deal?
My answers, for what it’s worth: my health (I’ve come close to sacrificing it; I won’t again), my ethics and integrity, my independence (I won’t enter financial arrangements that put me at the mercy of someone else’s goodwill), and, above all, my closest relationships.
What would you sacrifice money for without hesitation?
A family member in genuine need (no calculation required). Work I believe in, I’ve literally done this, working without a salary for nearly two years; I’d do it again, but with more margin underneath me next time. Experiences I know will stay with me. Learning and education: I’ve paid for knowledge and access some times and not regretted it.
The two questions surface what you’d actually do under pressure, not what you say you care about. The ranking tells you what you value. The sacrifice questions tell you what you’d protect when something has to give. Both are useful, in slightly different ways.
What this document is for
The reason for doing this exercise, and writing the answers down somewhere you’ll come back to is that financial decisions are constant. Big ones, small ones, hundreds a year. You can’t deliberate fresh over each one. You need a test you can apply quickly.
This document is the test. Every meaningful financial decision can be checked against it: does this move me toward what my money is actually for, or away from it? If yes, fine. If no, what game am I playing, and why?
It also makes the system that comes next; tracking, budgeting, investing, coherent rather than arbitrary. The mechanics of personal finance are universal, but the parameters are personal. How much risk to take, how much to save, how much to hold liquid versus invested. Those depend on what you said your money was for.
The next post is about the third pre-spreadsheet exercise: writing financial goals at three time horizons, and why I wrote them in reverse order.
Great content! Keep up the good work!