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Personal Financial Choices

FCIC: Personal Financial Choices




Part 1: The Basics of Chapter 7 Bankruptcy

Lesson 1: What You Need to Know About Chapter 7 Bankruptcy

Part 2: The Basics of Money Management

Lesson 2: Personal Planning, Values, Goals, & Priorities

Lesson 3: Money. Making It, Tracking It, Saving It, Spending It

Lesson 4: Smart Shopping

Part 3: The Basics of Credit Management

Lesson 5: Wise Use of Credit

Lesson 6: Is There Life After Chapter 7 Bankruptcy?

Part 4: Additional Resources

Your Rights Under The FCRA
Web Sites for Money Management
Books and Tapes
Glossary of Terms

Personal Financial Choices
Setting A New Course
Chapter 7
Resource Guide




At the conclusion of this lesson you should be able to:
1. Determine your values, what the most important things are to you.
2. Understand the steps in the planning process.
3. Establish realistic goals and write them down.
4. Set priorities for your goals; i.e. put first things first.


Financial success seldom happens by accident. And it seldom happens overnight. Those who are able to achieve their financial goals in life — even those with relatively little income — usually have identified their specific goals and then have developed a plan that will help them achieve their goals over time.

Even though you may feel overwhelmed at this point, remember that you CAN develop a financial plan for yourself that will help you to achieve your goals. Your financial plan doesn’t have to be complicated, sophisticated, or require the help of a professional. You don’t have to earn a lot of money to have a financial plan. Your financial plan can be as simple as finding a way to live within your income, pay your bills on time, and maybe save a little bit of money as well.

It is helpful to think of your road to financial recovery as just that — a journey. Your financial success is the destination of your journey, and your financial plan is the road map that will get you to that destination. Before we talk about how to develop your plan, it is helpful to explore some other facets of your life that can either speed up or slow down your journey to financial success. Just as you have many small and large choices that you must make in preparing for a trip, you will also have many choices to make in developing your successful financial plan.


Why are values important to a successful financial plan?

We value the things we think are important. In a time of hard financial choices, you have to re-examine the things you really value in life and decide to spend your money only on the things you value most. If you are not careful, you may end up devoting all your time, money, and energy to the immediate crisis and neglecting other things that are really important.

One way to help you decide which of your values is the most important is to set priorities. Completing the activities below will help.

Values Activity #1 — Values Priority Chart

1. List your additional values in the “Values” section on the left.

2. Rank them in their order of importance to you in the “Priority Order” section on the right.

For instance, if both financial health and mental health are important to you, which one would you choose to address first if you had to make a choice?


• Rewarding Career
• Financial Health
• Mental Health
• Spiritual Health
• Physical Health
• Family Relationships
• __________________
• __________________
• __________________

Priority Order



Values Activity #2: “I Won the Lottery”

What would you do if you won the lottery? Name the first three things
on which you would spend your money if you won the lottery:

1. __________________________________________________________
2. __________________________________________________________
3. __________________________________________________________

Did you find that the items you listed here reflect the values you listed in Activity #1? How much time, money and energy is spent on your first priority? Where are you spending most of your resources?


You often find that you have to make difficult choices between values when they compete with each other for your time, money, and energy. When values conflict with each other, success in one can cause you to have to compromise another. For instance, if you value your work and your family highly but your job demands that you spend a lot of overtime, a conflict could arise when that overtime at the office takes quality time away from your family.

The trick is to be able to balance your values so that they complement each other. This means that achievement in one promotes achievement in the other. But how do you achieve this balance in the real world? The planning process will help you achieve this balance because you will take all of your most important values into consideration when you develop your financial plan.

The values you have listed will be reflected in the goal(s) that you have set for yourself. You may well find that you have more than one goal that you want to pursue. That can be built into your plan. But just as you have set priorities with your values, you will also need to set priorities with your goals. We will talk more about the planning process later in this lesson, but keep the importance of planning in mind as you read more about values.


Values Activity #3: The Difference Between Wants and Needs

Where does most of your money go? Does it go to “wants” or “needs?”


What food do I like?

What clothes do I want to be in style?

What kind of car can I drive to make people think I'm important?

What kind of home will impress people?


What food do I need to stay healthy?

What clothes do I need for work or recreation?

What transportation do I need to get to work?

What housing meets my basic needs?

Examine the lists below. Have you ever thought you really need anything on the list
of “wants?”

Basic Needs
Food – Clothing – Shelter – Good Health – Love

Basic Needs for Work/Employment
Health care – Work skills – People skills – Transportation – Support from family – Stable home life – Enthusiasm for work – Good credit history

Car phone – VCR – 4WD Vehicle – Big house – Designer jeans – Boat – Sports car – CD player – Fancy sound systems – Truck – Fitness equipment – Whatever friends have – Vacations – Swimming pool – Credit cards – Whatever is advertised

The basic needs of life are quite simple. What good are the “wants” if we don’t enough
money for the basics of food, clothing, and shelter?



Money in and of itself is not worth much. The value of money is only a function of how it fulfills your own wants and needs. Some people have sold or given all they had to the poor. Others have spent their entire lives in the pursuit of wealth and power and have become rich. The true value of money to you probably lies somewhere in between these two extremes. The value of money is only a function of how it fulfills your own wants and needs.

“Money can’t buy you …”

Money can’t buy you many of the things in life that most people value most highly.

LoveMany people try to fill this emotional need by buying things.

Happiness If money could take away loneliness, rich people would not be lonely.

SecurityIf money could give real security, no one who is wealthy would ever feel insecure.

PrestigePeople you recognize as having power or position in your community aren’t always those with the most possessions.



What you think about money is shaped by the way you were brought up and all the experiences of your life. You probably heard both positive and negative messages about money when you were growing up — sometimes even from the same person. Knowing how these messages affect us today is important to understanding why we make, spend, and save money as we do.

Values Activity #4: Money Message

Take a moment and write down the answers to these questions.

• What messages or “sayings” about money did you hear from your parents,
grandparents, aunts, uncles, or other significant persons in your life?

• What did they say about money — making money, spending money, saving money, etc.?

• What didn’t they say about money?

After we become adults, some messages affect us more than others. What messages did you receive about money as a child which might be affecting your spending decisions today as an adult?

These impressions come from different sources and can affect the way we feel about money. For example, your concepts of money might be influenced by being the oldest or the youngest child, or an only child. What we learn in childhood, including our attitudes about money, becomes firmly set by the time we are adults. The same is true about differences in our personalities and upbringing. All of these factors affect our spending habits and, in turn, impact our relationships.


Communication is important to your money choices because the financial choices you make affect not only you, but also other people. Communicating your feelings about money and your financial objectives with others who are part of your life — your family friends, employers, business associates, and your attorney — is critical to your personal financial success. Just as we learn our attitudes about money as children, we also learn to communicate — particularly about money — in childhood. Did your parents, for instance, “never talk about money in front of the kids?” Did one of your parents hide his or her spending behavior from the other? Did your parents argue about money because they disagreed about how it should be spent?


In the best of times, communication can very easily become confused; in the worst of times, it can be almost impossible. You may have heard the Abbot & Costello comedy sketch about “Who’s on First.” This is a funny exchange because the two people are not communicating. A few simple “listening techniques” will help you be better able to communicate your concerns about money, your financial objectives, and your financial plan to others who may be directly or indirectly involved in your financial affairs.

Here are some simple techniques that you can use to improve your communication about money or any other topic of importance in your life.

  • Be clear about what you want to say before you attempt to explain something to
    someone else.
  • Identify the issue you want to discuss with the other person and make sure they
    understand it before you begin your discussion.
  • Don’t jump to conclusions.
  • Stay on the topic.
  • Ask the other person if they understand the meaning of what you are saying.
  • Tell the other person what you think they are trying to say to you.
  • Don’t blame!


In relationships, we are often attracted to opposites. We often seek out other people to make us feel more complete. Each person comes to a relationship with his or her strengths and weaknesses. However, these in turn can turn into power struggles. It then becomes hard to determine whose way is the “right way” to handle finances. There may be no “right way” to handle finances, but people who live and work together can find the “best way” to handle their finances by communicating their own feelings about money to each other.

Values Activity #5: Personality Types

Study this list of personality types, which might be said to be “opposites,” then fill in the spaces to the right.


Risk Taker or Conservative

Saver or Spender

Worrier or Happy-Go-Lucky

Detail Lover or Big Picture

Which One Are You?





Which One Describes Your Most Significant Family Member





There is usually a “gap” in the thinking of individuals who are opposites. The goal of communication is to build a bridge between people, to “bridge” this gap so that they can work together to achieve each of their financial goals.

Defining the “type” of your partner will allow you to discuss financial matters from his or her perspective, not yours. This technique will facilitate productive communication.

   Emotions and Money

Do you think that feelings or emotions affect the way you spend money? Ask yourself if you are spending your money on the things that are really important to you, or whether you are spending money for other reasons, such as these:

  • Have you ever felt deprived and angry when you didn’t have enough of what you really wanted for yourself?
  • Have you ever spent money you didn’t have on “bargains” thinking that you were saving money?
  • Have you ever used your credit cards to buy things because you didn’t have enough money to pay cash for them?

Do you control your money or does your money control you? Here are emotions which may have affected your spending at some time in the past.

Have you ever been angry with someone so you spent money just to “get even?”

Have you ever felt guilty about neglecting someone so you bought them a gift to make you feel better?

Have you ever bought something just because someone you know had one just like it, not because you really needed that item?

Have you gone to the mall when you were feeling down, or have you spent money you didn’t have because you thought buying yourself something would soothe your feelings?

Have you decided to celebrate something good that has happened to you by purchasing a wanted but not needed big ticket item?

Have you ever gotten off work and avoided going home because no one was there? Did you then go shopping so you wouldn’t have to be alone?

Values Activity #6: Values and Goals Questionnaire

Answer the following questions: If you live with others, think about how they might answer. Ask them to answer these questions, too. You may be surprised at what you will learn about each other.

• What are your greatest fears about money? What do you think might happen if you don’t have enough?
     Your Response
     Partner Response

• What money topic often starts an argument within your family?
     Your Response
     Partner Response

• If you had to cut back on spending, what would you cut? How much could you save?
     Your Response
     Partner Response

• If you suddenly had $10,000, what would you do with it?
    Your Response
    Partner Response

• What was the poorest choice(s) you ever made about money? Why?
     Your Response
     Partner Response

• How has your attitude about money changed from childhood, or in the last three to five years?
      Your Response
      Partner Response

• What kind of things are a pleasure to buy?
      Your Response
      Partner Response

• What kind of things are not a pleasure to buy?
      Your Response
      Partner Response

• Do you think you are too tight with money, too free with money, or about right with your spending habits?
      Your Response
      Partner Response

• If you wanted to save money for somethings that are important, what would they be?
      Your Response
      Partner Response


Now that you have a better understanding of how your values affect your priorities, how your priorities affect your spending choices, and how your spending choices are affected by your attitudes and beliefs, you can start to identify your financial goals. When you have a clear understanding of your goals, then you can start to develop your plan to achieve them.

You can regain control of your financial life, establish financial security, and achieve your own personal goals and dreams. For instance, imagine yourself debt free, living within your income, and saving money. This is a realistic goal!

We talked about using the planning process as a roadmap that will help you reach your goals. Identifying your wants and needs is like putting up the various traffic signals that will help you get to your destination without having an accident.


1. Assess needs
2. Set goals
3. Make a plan
4. Take action

    Step #1. Assess Needs

Evaluate your current financial situation. In this step, take a broad look at the way things are now. Ask yourself these questions:

  • What are my basic needs?
  • What else do I need?
  • Do I really NEED it? Is there an alternative to buying it now?
  • What else do I want?
  • Why do I want it?
  • How would life be different if I had it? What would change if I had it?
  • Make a list of wants and a list of needs. Go back to Activity 1. Do the lists agree with your values and priorities?

    Step #2. Set Goals

A goal is a specific result you intend to work toward. A realistic goal is SMART:


Specific — Set specific goals which you can clearly name. For example, save money to get a new refrigerator — not just to save money.

Measurable — Measure goals by the time and/or money it will take to attain them.

Attainable — Make sure goals are reasonable and possible. For example, “I know I can save X dollars each week to reach my goal within six months.”

Relevant — Make sure your goals fit your needs.

Time-related — Set a definite target date. For example, “I must save enough to purchase a new refrigerator within six months (by ___month, ___day, ___year).”

Now, list the results you are working toward. Examples of goals could be as follows:

• “By _____(date) I will have paid off my _____________________.”
• “By _____(date) I will have saved $_____(specific dollars) for a trip to visit _____.”
• “By _____(date) I will have _______________________________________________.”
• “By _____(date) I will have _______________________________________________.”
• “By _____(date) I will have _______________________________________________.”
• “By _____(date) I will have _______________________________________________.”
• “By _____(date) I will have _______________________________________________.”
• “By _____(date) I will have _______________________________________________.”

    Step #3. Make a Plan

Imagine the actions or steps you need to take to get from where you are now to
where you want to be. The more steps you can visualize, leading from where you are
to where you want to be, the more likely you will be to reach your goal.

Once you can truly “see” the actions you need to take to get to where you want to
be, write down everything needed to accomplish each of these actions. Be sure you
think about the money, time, energy, people, and information that will be required.

Action                                 Resources Needed
_____________________ ___________________________________________
_____________________ ___________________________________________
_____________________ ___________________________________________
_____________________ ___________________________________________
_____________________ ___________________________________________

Next determine the best order for the steps you should take. What do you have to do
first, second, third... last? Try to foresee possible roadblocks to reaching your goal,
but don’t let these roadblocks discourage you. Thinking about them now will give
you the opportunity to prepare for them before they happen.

    Steps                                          Possible Roadblocks          Possible Solutions
1. _________________________ _____________________ ___________________
2. _________________________ _____________________ ___________________
3. _________________________ _____________________ ___________________
4. _________________________ _____________________ ___________________

    Step #4. Take Action

Take the first step. Many times goals are not reached just because the first step was never taken. Just having a plan doesn’t mean you will reach your goal. You must actually take the actions listed in your plan.

Keep on keeping on. When you encounter obstacles, persistence wins more often than talent. Place reminders or pictures of your goals where you will see them every day. This will remind you of them as you make financial choices.


Financial success is usually a result of consciously deciding what we really want and need and making a realistic plan to achieve these things. In order for us to get what we want or need or help someone else to get what they want or need, we have to have a clear understanding of our values. Our values affect our priorities, and our priorities affect our spending choices. All along the way, our background, training, relationships, emotions, and communication all influence the choices we make about our goals, priorities, and spending.

Whenever you spend money for anything, you are making a decision, even if it is a small one. Before you take out your wallet, remember what you value most in life, what goals you have already
decided you want to achieve and when, and the plan you have made to achieve those goals.

You may even forget once in a while and spend money without thinking. If you do, it isn’t the end of your plan. But you do need to assess how that thoughtless expenditure has affected your plan. Then, adjust your plan so that you can get back on track right away. We will talk more in the next chapter about just how to spend your money so that your daily spending keeps you on plan.

Lesson 3 >>

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