Values-First Financial Planning
Define the good life before choosing the financial machinery
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 6
- Confidence
- 96%
Values-first planning begins by separating authentic aspirations from mimetic goals copied from neighbors, relatives, or social norms. Instead of immediately selecting target balances, products, or simulations, the planner explores the person's values, desired experiences, relationships, purpose, and vision of the good life. Repeated why-questions deepen surface wishes such as owning a boat or retiring at a particular age into the life outcomes those wishes are supposed to enable. The resulting vision should be emotionally meaningful, vivid, and specific enough to guide trade-offs. Only then are savings targets, portfolio assumptions, and technical simulations introduced. The mechanism improves efficacy because financial tactics become instruments for a personally compelling future rather than machinery attached to a weak copy of somebody else's dream.
Origin
Daniel Crosby connects the method to work by Carl Richards and Michael Kitces on human imitation, or mimesis. Extracted from Masters in Business.
Core principles
- 01Financial goals should emerge from personal values
- 02Imitation creates borrowed goals
- 03Deep questions produce more useful plans
- 04Emotionally meaningful goals improve follow-through
- 05Technical analysis serves the vision rather than defining it
How to run it
- 1
Surface the stated goals
List the financial outcomes currently guiding the plan. Include possessions, retirement dates, income targets, gifts, and desired experiences.
Pro tip Record whose example first made each goal attractive.
Watch out Do not assume a conventional goal is automatically an authentic one.
- 2
Test for imitation
Ask whether each goal reflects personal values or merely resembles what a neighbor, relative, or peer has. Remove or reframe goals that lack a personal reason.
Pro tip Imagine that nobody else would ever see the outcome and ask whether you would still want it.
Watch out Rejecting imitation does not mean rejecting every goal shared with other people.
- 3
Explore the good life
Describe the desired future in terms of daily activities, relationships, contribution, freedom, growth, and place. Continue asking why until the answers become emotionally meaningful.
Pro tip Ask what an ordinary Tuesday would look like in the desired life.
Watch out Shallow questions tend to produce shallow answers.
- 4
Translate values into outcomes
Convert the vision into specific, observable priorities and constraints. Decide which outcomes matter enough to fund and which trade-offs are acceptable.
Pro tip Separate the underlying value from any single purchase that might express it.
Watch out A purchase is not necessarily the only or best way to satisfy the value beneath it.
- 5
Build the technical plan
Use cash-flow assumptions, savings rates, investments, and simulations to support the clarified priorities. Evaluate technical choices by how well they advance the vision.
Pro tip Model alternative ways to reach the same valued outcome.
Watch out Technical precision cannot rescue a plan aimed at the wrong life.
- 6
Revisit the vision
Review the values and desired life before updating the numbers. Change the financial machinery when the underlying vision legitimately evolves.
Pro tip Begin annual reviews with life changes rather than market performance.
Watch out Do not preserve outdated goals simply because substantial planning has already gone into them.
In the wild
A client says his goal is to own a boat like his neighbor. Deeper questions reveal that he actually values uninterrupted time outdoors with his children. The adviser compares boat ownership with rentals and recurring family trips, then builds the plan around protected family experiences rather than the copied possession.
→ The plan funds the client's underlying value with greater flexibility and less unnecessary expense.
Common mistakes
Starting with simulations
Monte Carlo analysis can optimize implementation but cannot determine which life is worth implementing.
Accepting the first answer
Surface goals often describe a purchase or social comparison rather than the underlying value.
Treating emotion as irrelevant
A plan without an emotionally compelling purpose is less likely to guide behavior when trade-offs become difficult.
Is it for you?
Best for
It is best for individuals, couples, and advisers creating or revising a long-term financial plan.
Not ideal for
It is not a replacement for the technical modeling, legal work, or investment analysis required to implement a plan.
From the transcript
“we're really prone to imitation and doing what other people do.”
“getting it right in a financial plan means going a lot deeper with someone on what they value and their vision of the good life…”
“the first step is getting laser focused on that vision for the future, that purpose, that why”
From the episode
At The Money: Our Complicated Relationship With Cash