Investing and building wealth in alignment with your family values sounds wonderful, right? Below is the five-step process on how to build wealth without compromising your values.

 

1.     Begin with self-examination.

Taking time to think about who you are and what you want out of life isn’t easy.  It’s downright ugly sometimes.  But you are stifling growth opportunities if you continuously live in the moment and never leave time for self-reflection. 

Look at the last week, month, or year of life.  What are some of your proudest moments?  Weakest ones?  Then, bring yourself back to the present.  Consider the gap between where you are now and where you want to be in the future.  How do you envision your life six months from now?  One year ahead?  Three years from now? 

If you are a highly analytical person, you probably spend a lot of time reflecting on the past and planning the future.  Your challenge is not taking the time for self-examination; rather, it is to hear the small voice within you that is the cheerleader.  The critic in your head might be saying “you’re not worthy” or “you’re not good enough.”  These are lies. 

Once you put limiting beliefs aside and create a future vision for your life, examine your values. 

Who or what is most important to you?  Family?  A personal relationship with Jesus?  Generosity?  Honesty?  Integrity?  Adaptability?  Read this article if you need extra help identifying your values.

 

2.     Translate personal values into family values.

Select five to ten values that really resonate with you.  If you’re married, ask your spouse to share his or her values as well.  Then decide on the family values that you want to pass along to children (and possibly grandchildren).  Eventually, narrow the list down to one or two core values that serve as guiding principles for each decision you make as a family.   

Christians typically have values that contradict commonly-held societal beliefs.  Be courageous as you defend your family’s core values.  Your neighbor’s values might look different than yours, and that’s OK. 

If your core value is family but you are slaving away at work 60 hours a week, are you really living out your core value?  Is there a way to lighten your workload so you can be more present to family? 

If you value experiences over tangible items but all of your son’s classmates are getting the latest Nintendo gaming system, are you going to buy the same system?  Does buying that game give him more time with or without you? 

Living in accordance with your values isn’t the easiest or most popular decision, but it is the key driver in building all facets of wealth — financial, human, and social capital.

 

3.     Create more teachable moments.

Parents are the best teachers.  Whether you’re at a stop light or waiting in the check-out line at Target, you have an opportunity to model positive behavior – especially for young children.  Kids are sponges, and actions speak louder than words.

Technology can be great, but it can also be isolating.  Rather than reaching for your phone during a family dinner to provide entertainment or check email, keep the phone out of sight.  Engage in real conversation with your child about his or her day.  Ask about their plans for the future.

When you are running errands and your child begs you to buy the latest iPhone, don’t simply say “we can’t afford it” if you truly can.  More likely than not, you have the money to buy something.  You just choose not to buy it because that purchase conflicts with your family values.  Turn this temper-tantrum worthy moment to a broader values-based discussion.  Be direct and concise (as opposed to long-winded and vague), and your kids will appreciate it. 

 

4.     Develop a cash flow plan that works for your family.

I’ve worked with over 100 families and have not seen identical budgets.  While the categories may be similar, how people are allocating their money is vastly different.  Again, avoid the temptation to Keep Up With the Jones’ and focus instead on your family’s core values.

Charitable donations, or tithing, are not a line item on every family’s budget.  Christians are called to give 10% of their gross income back to the church since tithe literally means tenth and is considered holy.  I know plenty of Christians who are aren’t giving anywhere close to 10%.  It is not because they are bad people, it is simply because they have not put intentionality into the budget.  They have not prepared a cash flow plan through the lens of family values.  To increase outflows in one area, you must decrease outflows in another (or increase income).

Trade-offs happen daily.  When you and your children go to a moderately priced restaurant, you’ll spend more money than if you cooked a pasta dinner at home.  Buying the latest Apple product means you may need to forego concert tickets this month. 

A single, small purchasing decision will not substantially impact your family budget.  But that same decision for an entire month will influence your overall cash flow plan.  Buying a Starbuck’s coffee every work day turns out to be $1,000 over the course of a year (~ 200 work days * $5).  Is there a better use for that $1,000?  Only you know after you’ve examined your family values.

 

5.     Put your money where your mouth is.

You identified personal and family values and created a cash flow plan that reflects those values.  What next?  Retirement savings and other long-term financial goals can be tackled. 

Want to know the surprising truth about values-based investing?  Not only is it possible, but it’s often more profitable!  You can read all about my investment philosophy in Chapter 7 of Redefining Family Wealth, but for now, we’re going to focus on socially responsible investing (“SRI”).  It is most commonly known as socially conscious, ethical, green or sustainable investing.  These strategies emphasize not only financial return but also social or environmental good to instill positive change. 

SRI funds typically invest in companies on the forefront of environmental stewardship, diversity and inclusion, and human rights.  Other funds use social screening criteria to avoid businesses that sell tobacco, alcohol, weapons, contraceptives, or other controversial items. 

Vanguard’s FTSE Social Index Fund is an example of a socially responsible fund that invests in large capitalization companies.  Its largest holdings are Apple, Microsoft, Facebook, JP Morgan, and Google.  Carrying a 0.2% management fee, it offers diversification similar to the S&P 500 Index but with a social and environmental filter.

The Morningstar Sustainability Rating provides a reliable, objective way for investment advisors to see how investments are meeting environmental, social, and governance challenges.  As values-based investing becomes mainstream, there will be even more transparency around specific investment options. 

 

Five simple steps, and you’re well on your way to building family wealth in alignment with your values.  Want to read more on this topic?  Get our Starter Guide and family wealth-building strategies for FREE.