It’s one of the first principles I present to clients when we dive into financial planning. Before we can make plans for the future as well as adjustments to the present, we need to understand what your personal “Wheel of Life” consists of.

The Wheel of Life represents nine core areas where we typically spend our time: finances, family, health, leisure, learning, inner growth, home, community, and work.  Created by an organization called Money Quotient, this is one of the financial planning tools we use to help us get to the heart of our client’s values and priorities, establish meaningful financial and life goals, and create an effective and inspiring decision-making framework.

 

Wheel

Here’s how to use it:

  • Place a dot on each spoke that indicates your level of satisfaction in that particular facet of life. Use a scale of zero to ten with zero at the center of the circle and ten at the rim. A zero indicates no satisfaction, and a ten indicates the highest degree of satisfaction.
  • Now draw a line to connect the dots and create your life wheel.
  • Is your life wheel round or does it show flat spots? Is it deflated or is it full? What does this exercise tell you about your life? How balanced is your life? Are there areas of your life that need attention? In what facets would you like to experience more satisfaction?

These nine areas won’t all be in complete balance; however, it’s important to recognize that each of these aspects in life are interconnected – they all impact each other. This exercise helps us realize when one area of the wheel is unsatisfying, it can directly affect other areas and your overall shape of fulfillment. When used effectively, the Wheel of Life helps you clearly identify your current life satisfaction while visually acknowledging the aspects of your life that need more attention. The goal is to find a comfortable balance across each category to live a more satisfying life.

All of this is relevant to one’s financial present and future. When a person flourishes, they are connected and aligned to these areas of their personal and financial life, giving them a sense of satisfaction. It is about being aware of one’s values and priorities and making financial choices in each area of life that align with and support those values and priorities. The outcome is a sense of satisfaction, personal well-being, and intrinsic reward.

Identifying and Adhering to Your Values

Understanding our values is so important as it related to these nine components of finances, family, health, leisure, learning, inner growth, home, community, and work. Together it can provide a detailed view of what is most important to you and how you are (or aren’t) dedicating the time and attention needed to meet those values. If you don’t know your values, if you don’t know what you want from your life, you can’t set the financial goals you need to get those things. For example, if you really want to focus on inner growth, that might mean you need to work less, which will affect your finances. If you want to focus on a career change, that will affect your finances. Finance is not a silo. It’s an interconnected piece of your life. It affects everything, and everything affects it.

For many clients, this conversation is the first time they clarify their values. This is because no one usually challenges us about money. No one engages us or gives us an opportunity to consciously think about what those values are. For instance, have you stopped to ask yourself, “what does retirement actually mean to me?” When you stop to honestly answer the questions, it’s not just a dollars-and-cents equation. It’s a lifestyle.

So many of us say we value one thing and then engage in activities that don’t support those values at all. In some situations, particularly when clients are struggling to articulate their money values, I provide a one-page sheet of values and ask them to choose their top twenty or thirty values and then gradually refine that list to between five and seven values. Let me give you an example of what some of those values might be:

  • Achievement
  • Autonomy
  • Balance
  • Challenge
  • Compassion
  • Creativity
  • Entrepreneurship
  • Fun
  • Happiness
  • Health
  • Integrity
  • Leisure
  • Respect
  • Safety
  • Security
  • Spirituality
  • Wealth

And so on. Putting a name to what you care about and value is incredibly insightful. Once you’re able to narrow down to five or seven different values, start to ask yourself things like, “What does this value mean to me? Why is it important to me?” Think about specific examples and experiences that may contribute to how you feel about those values. When we recognize our values, our financial priorities – and why we think they are priorities – will become clearer.

An article from Money suggested attempting to take a list similar of these financial priorities/goals and rank the list in order of importance. “That’s not as easy as it sounds, since financial goals continually collide with one another. Paying for a child’s braces may rob money that would otherwise go into his college fund, for example. And saving effectively for your kids’ college can wipe out any hope of putting aside adequate money for your own retirement. If you are struggling to prioritize between two important goals, ask yourself: Will one of the goals benefit more people than the other? Which goal will cause the greater harm if it is deferred?”

Getting to the Crux of What is Important to You and Why

When we start asking tough questions as it relates to our values and financial goals, we’ll get to the heart of what we value as critical, since everyone defines family, financial independence, open-mindedness, and diversity differently. Financial independence, for example, means different things to different people.

Our values and belief-systems are very much influenced by our families and what our parents (or guardians) instilled in us as we grew up. Those values will undoubtedly influence how you see the world and what you tend to prioritize. However, it is important to establish your own values around money and not be completely influenced by your family. Although your family’s money values leave an imprint, it’s crucial to sit down and think about how your values have evolved and changed over time.

For me, owning my own business and spending my days doing what I love are what I value most. To others, it may mean having enough money to travel. Without really looking at your values, you can’t honestly articulate your goals, and you won’t be able to align your values and goals with your spouse.

So, You Say This is Important…

You’ve identified your values, you’ve likely recognized what financial goals matter to you and why. The next question to consider is, does your current life reflect those priorities and values? Have you ever known people who say they value their health, yet they never exercise and constantly eat fast food? So many of us say we value one thing and then engage in activities that don’t support those values at all.

Taking an honest look at our Wheel of Life should give clear indicators of whether those nine areas of life are in harmony with the values you have identified. Consider this a dynamic exercise – one that will need to be revisited as you pass through different seasons of life. So often our desire to be in balance and the reality of day-to-day demands can cause a misalignment between what we are doing and what we truly value. In addition, most of us have more than just ourselves influencing our Wheels of Life.

Sharing Priorities, Values, and Life Goals

In many situations, financial planning not only involves one person, but a couple – two individuals with entirely different sets of values. Even if you are 100 percent in touch with your own values, life priorities, and your money story, if you’re sharing a life with someone, you need to understand how that person views these areas as well. If you don’t, compromising and achieving joint financial goals will be challenging.

To give you an example, financial independence is one of my core values; however, my husband, Jay, has not identified money or financial independence as part of his core values. Jay defers to me for all financial decisions. We both have access to Mint, an app and online platform that helps people easily track their spending (which I set up), but Jay doesn’t look at it. This can make me feel resentful or lonely because, ultimately, it’s up to me to make the finances work. However, when you understand your partner’s values and why they have them, you can better understand your partner’s attitude toward money and what matters most to them. I understand that Jay cares about our finances, but I also understand his approach to managing them is different from mine.

Understanding your partner’s money story and values will help clarify how and why your partner makes financial decisions. This can help bring you both to a common ground, which is necessary when you start looking at your joint financial future.

Achieving the Financial Future You Want

These conversations will be enlightening and at times difficult, but you need to have them in order to achieve your goals. Once you share your values, priorities, goals and are transparent about the state of your finances, you can agree to a financial future. Again, when you are able to identify what it is you both want and why, you can reflect on your Wheel of Life as an individual, couple and family to make the adjustments needed to achieve that future.

Remember, money is about much more than dollars and cents. It’s about our family, it’s about our life values, our day-to-day priorities and it’s about the conversations we do or do not have with the people who influence our financial futures. These conversations are key to your success.

The most important (and perhaps the most overlooked) part of the financial planning process is the method by which defined goals are brought into focus. A clear path for achieving goals should be set, values should be talked about during that conversation, and a plan should be put into place to follow that path. When you take the time to understand how you are currently spending your time between the nine areas in your Wheel of Life and compare that to the values and goals you have for you and your family, you will be far more likely to achieve the financial future you desire.