Let Your Values Guide Your Spending Decisions

Like millions of others, I was dumbstruck when I heard Susan Boyle, the dowdy spinster who belted out a tune that moved an entire audience and a panel of judges to silent awe. Likewise, as Kevin Skinner, former chicken catcher, crooned like Garth Brooks, I looked on in wonder. The Susan Boyles and the Kevin Skinners are poignant, even painful reminders of just how untrustworthy our perceptions can be.

Our eyes and ears and noses make sensory perception inevitable. When we perceive something with our senses, our brains become little factories that shuffle our perceptions through an assembly line of our experiences and expectations. The problem is when we let our perceptions go unchecked.

Consider how perception so often influences our financial decisions. We naturally observe those around us, and in so doing, assume many things. We presume, for example, that our neighbor must have gone into hock in order to buy that new boat. This presumption is based on what we think we know: he is making "x" amount a month, he has a mortgage like ours, and he couldn't possibly have had the cash for the boat.

Though we think we can ballpark our neighbor's salary, we really have no idea how much he takes home. Similarly, we don't know what his savings patterns are like or if he plunked down a huge down payment on his house. He may have been saving for that boat for the last five years. What we don't know, however, often guides our own spending decisions. "If he can afford that boat on his salary and with his mortgage, then why can't I go ahead and book that trip to the Caribbean?" we reason.

Not only do we often misperceive others, but we also worry that others will misperceive us. That's why we overspend on a wedding gift for an old college friend or agree to eat out at the pricey restaurant when we really can't afford to. We certainly don't want to look cheap, and we may even want to give the impression that our spending habits are congruent with our level of financial success. In other words, if we spend big, then others will think we're successful.

It's not difficult to see the danger in giving our perceptions this much power. What can be difficult is finding our way through the countless messages that say, "This is what makes you sexy, successful, powerful, or intelligent." Though we can't keep our eyes from seeing or our ears from hearing, what we can do is use our values as our guide to making wise financial decisions.

What is most important to you? When do you feel most alive? What motivates you? Use your answers to these questions to help you decide where and how to spend your money, not on often misguided or mistaken perceptions.

-Carey