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The Key to Making Smart Money Decisions

It’s all about knowing your life values — and there’s a great online quiz to help you do that. It can keep couples from fighting over money, too.

By Richard Eisenberg

I bet you’d like to make wiser decisions about money and get better at making your retirement portfolio grow.
There’s one way to do it that doesn’t require becoming an investing savant or getting a certified financial planner’s license: Figure out your life values then manage the way you spend, save and borrow accordingly. If you have a spouse or partner, multiply this advice times two.
Take the LifeValues Quiz
My suggestion for sussing out what really matters to you is to take the free interactive online LifeValues Quiz on the site and complete the accompanying LifeValues Exercises, which help you see how your childhood affects your current relationship to money. is operated by the nonprofit National Endowment for Financial Education, or NEFE, and designed to help people make sound financial decisions.
(Next Avenue’s “What’s Behind Your Financial Decisions?” has a link to the 20-question quiz, one of the most popular features on
The LifeValues quiz and exercises were created by social psychologist Lois A. Vitt, chair and founding director of the Institute for Socio-Financial Studies in Charlottesville, Va. They’re somewhat similar to the Interactive Money Mind Analyzer created by The Money Code author Joe John Duran, which I recently blogged about.
(MORE: The Secret to Financial Happiness)

In case you think Vitt’s work sounds a little touchy-feely, it’s worth noting that she formerly supervised financial advisers and says she was the nation’s first female mortgage loan officer.
Part of a Growing Money Psychology Movement
And other money experts echo the importance of marrying your values to your financial planning.
Chris Farrell, economics editor for APM’s Marketplace Money and a regular contributor to Next Avenue, says you must know your values to plan for retirement wisely. There’s even a Financial Therapy Association, whose website has a directory of pros you can hire to deal with your money-psych issues.
“I think financial advisers are moving in this direction,” says Patricia Seaman, NEFE’s senior director of marketing and communications. “Knowing the values of their clients provides a more complete understanding of them.”
How the LifeValues Quiz Can Help You
After using Vitt’s system to score your life values, you may be surprised at the results — I was. They may cause you to rethink the way you manage your money.
And if you’re married or in a serious relationship and both of you complete the drill, there’s a pretty good chance you’ll wind up having fewer fights over household finances.
“Usually when couples take the quiz and the values-framed exercise," Vitt says, "they see each other through new eyes and better understand where each of them is coming from.”
The 4 Key LifeValues
Vitt’s quiz measures the true importance to you of four values, assigning points to every answer; the higher your score in a category, the more you care about that value. A “high” LifeValues score means that nine or more of your answers matched the category; a “low” score means four or fewer did. The values are:
Inner LifeValues These are personal, psychological and spiritual questions that get at your desire for security, control over your life and the need to achieve. Vitt says your inner values can help you survive a sudden money crunch that blindsides you.
Social LifeValues These deal with the importance you place on family, friends and community. Your social values are revealed, partly, by how strongly you feel about providing for others and, if you’re in a relationship, whether you budget jointly and share expenses.
Physical LifeValues These might not be what you expect. They’re about what Vitt calls “the tangible aspects of life” and range from your health to your desire for comfort at home to how much the style of clothes and cars matters to you before buying those items. 
Financial LifeValues They reveal what you think or believe about money and how you value what it can do for you. These values are unrelated to the amount of money you have and don’t necessarily reflect how much you know about finances. They get at how much you’re concerned about whether you have enough money, how long it will last and if you’re making smart financial decisions.
(MORE: The Holistic Approach to Retirement Planning)
What Your Quiz Results Mean
There are no right or wrong answers to the LifeValues quiz. “Certain values matter more to some people than others,” Vitt says.
Some people don’t care about money, she notes, and they typically score low for financial values in the quiz. Those with high scores for physical values tend to be creative and are “the kind of people who like the lines of a car, but don’t care how it runs,” Vitt says. Teachers, firefighters, doctors, nurses and others who Vitt calls “helpers of humanity” tend to have high social scores. If you have a very high score for inner values, she says, “you want to control people and might be a megalomaniac.”
The Quiz Can Show Reflections and Mismatches
After taking the quiz, you may find your scores can serve as a reminder about the things that matter most and least. Then you can shape your financial decisions accordingly or, as Clayton Christensen, author of How Will You Measure Your Life? says, “allocate your resources properly.”
Seaman, the project manager who turned Vitt’s work into the interactive quiz on, says her results reflected a mirror image of herself.
“I got a high score for financial values, a middle score for inner and social values and a low score for physical values,” she says. “I wasn’t too surprised about the low physical score. We moved into our house four years ago and still have paint swatches on the wall because I haven’t made a decision about them yet.”
(MORE: What’s Your Money Mind?)

After taking the quiz, you might, however, discover a mismatch between your values and your financial situation that requires remedying. “If you find you really love comfort but don’t make enough money for the lifestyle you want," Vitt says, "you can say: 'OK, I have two choices. I can reduce my lifestyle needs or I can save more money and plan to manage my finances better.'"
If you score low for financial values, you may want to hire a financial planner who’ll devote more attention to your money than you do.
Have Your Adult Children Take the Quiz
As useful as the LifeValues quiz is for people in their 40s, 50s and 60s, I think that if you’re a parent with adult children, you might want to have them complete it, too. Then talk with your grown kids about their results.
You may discover they score so low on financial values that you should educate them about the importance of budgeting, saving and debt or perhaps hook them up with a money pro.
How I Scored on the LifeValues Quiz

As for my scores, well, Vitt thinks my high figure for financial values makes sense since I’m the editor of the Money & Security and Work & Purpose channels for Next Avenue. “I’d be surprised if that score wasn’t high, because you think about finances a lot," she says.
But Vitt was a little concerned about my low score for inner values. “That’s unusual,” she said. “Most people have inner values higher than yours.” Guess I may need to give myself a values check.

Photograph of Richard Eisenberg
Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More
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