There is an important difference between values and ethics. In fact, I have found the distinction to be incredibly helpful in my understanding of finances.
Ethics, defined, is a system of moral principles.
Values, defined, is relative worth, merit, or importance.
Ethics deals with right and wrong. But values deals with what is important to a given person.
Hypothetically, if we were all getting our ethics from the same source, they would not change from one person to another—what is right or wrong for you, would also be right or wrong for me.
Values, on the other hand, could vary significantly from one person to another. You may value security; I may value freedom. One person might value hospitality, another person might value travel, while someone completely different values compassion.
None of those values are inherently right or wrong, they are just different. Each person simply places more worth (or value) on one than the other.
The difference between ethics and values prompts a unique question in my mind—one that I’ve been wrestling with for quite some time.
Specifically, what is the role that ethics ought to be play in my personal finances?
What is right and what is wrong in how one pursues, accumulates, and spends money?
Most people, it seems to me, have a broad definition that they use to answer that question.
We apply broad ethics to our finances. Things like:
- It is wrong to steal money.
- It is wrong to extort money.
- It is wrong to bribe with money.
- It is wrong to be jealous of others.
- It is moral and right for me to help others financially when I am able to do so.
These are financial ethics that most of us apply and adhere to in our lives and to our pursuit, accumulation, and spending of money.
So we do routinely apply ethics to our finances—but only in very broad terms. Beyond that broad application, we don’t tend to get particularly detailed in our pursuit of financial ethics.
Instead we tend to make our every day financial decisions based on values rather than ethics.
So we don’t ask detailed questions that sound like this:
- Is it wrong for me to spend this much money on a car? Is it wrong for me to buy this size of house?
- What is my moral obligation to pay off debt rather than spend on myself?
- Is it okay for me to make this much money?
- What is an ethical amount of money I should be saving this month?
- What is an ethical amount of money I should give to help others?
- Is there a moral question to be asked in how much (or how little) I am paying for this service?
Most of us, myself included more often than I’d like to admit, do not ask those ethical questions of our everyday financial decisions. Instead, we base our decisions on values:
- I want x, and I have the money to buy x, so I am going to buy it.
- This is important to me, so I am going to spend money on it.
- My goal is to have this much money in the bank, so I am going to keep everything for myself until I reach that number.
- I want to make as much money as possible, and here’s how I can do that.
You see how that works? Values guide our financial decisions, not ethics.
Except for one place…
When it comes to others, we are quick to apply a filter of financial ethics that we rarely ask of ourselves.
This is particularly prevalent today in our opinions of those with more.
We live in a society that is quick to discern and identify those with more who are not applying ethics to their financial circumstances. At least, in our opinion, they are not being guided by ethics.
So we are quick to make moral judgements that they…
—should not have that much money.
—should not spend their money in that specific way.
—should not buy x.
—should spend more money on y.
—should be giving away more.
—shouldn’t be driving that kind of car.
—shouldn’t be living in that big of a house (or owning that many houses).
—are selfish because they have z.
Because they are not spending their money in the way we believe they should be spending their money, they are greedy or selfish or immoral.
Meanwhile, the person’s financial ethic we should be most concerned about is our own.
We are quick to place a filter of ethics on others’ decisions, but rarely apply those same filters to our own.
Indeed, ours is the only pocketbook and bank account we have control over. Rather than spending time concerning ourselves with others, we ought to focus intently on our own personal financial ethic and how to apply it to our unique financial circumstance.
After all, ours is the only pocketbook and bank account that we will have to give an account for at the end of our lives.
Am I proud of how I pursued, accumulated, and spent my financial resources? This is a question that we will all face at the end of our lives.
We can be proud knowing that we lived a life aligned with our values. But an even greater amount of pride can be found knowing we lived what was right and moral and ethical.
The person’s financial ethic we should be most considered about is our own—not someone else’s.
We have enough ethical questions to be asking ourselves anyway.
About Joshua Becker
I constantly think about how I spend money. And what we are doing is significant with the money. However, i have another question about money. My family has a very good standard of living, especially where we live in Brazil. However, our money today is obtained exclusively from my husband’s work. He is an engineer at a plastics multinational and they seal almost everything for packaging. And we know that the packaging sector is very wrong, these days. This ethical issue bothers me a lot.
Do you have any recommended resources for learning more about this subject or to help with further self-examination?
Likewise I ‘d like to get links to resources from home . Please excuse my frugality
Goodness, this was a good one! It isn’t something I’ve been able to put words to, but something that has been rattling around in my brain for a couple of years now. As of Friday, I will be debt free, and I’ve really been thinking through what is the next financial step I feel called to take. I want to be wise and a good steward of the money that I have, but I also want to make a difference in the lives of others. Thank you for the post, these questions to consider, and for your continued work!
I’d like to share an excerpt from Jonathan Safran Foer’s book, Eating Animals, that reminded me of this post:
“My name is Frank Reese and I’m a poultry farmer…People are so removed from food animals now. When I grew up, the animals were taken care of first. You did chores before you ate breakfast. We were told that if we didn’t take care of the animals, we weren’t going to eat. We never went on vacations. Somebody always had to be here. I remember we had day trips, but we always hated them because if we didn’t get home before dark, we knew we’d be out in the pasture trying to get the cows in and we’d be milking cows in the dark. It had to be done no matter what. If you don’t want that responsibility, don’t become a farmer. Because that’s what it takes to do it right. And if you can’t do it right, don’t do it. It’s that simple. And I’ll tell you another thing: if consumers don’t want to pay the farmer to do it right, they shouldn’t eat meat.”
I believe your question, “Is there a moral question to be asked in how much (or how little) I am paying for this service?” directly applies to our eating habits as well, particularly when it comes to eating meat. I’m not a vegan or vegetarian, but it’s something that I consider a lot, especially after having read this blog post and while reading this book. I don’t know what your diet is like, but I think regardless of what or how you eat, it would be really helpful to write about how minimalism as a lifestyle can (and perhaps must) be applied to food.
Thank you so much for all of your posts, and thank you for this insightful article that has made me look more closely at the ethics and values behind my purchases.
Thank you for a very thought-provoking article! I have enjoyed following you for about 5 years now but this is my first time commenting.
This post really called me out. I am a single mom who has to live very frugally to make ends meet. My teenage sons and I live in a tiny condo that we rent. It is more than enough for us. I’m a big time minimalist. Well, I was walking in a neighborhood behind where I live where the houses are gigantic and easily cost in the millions of dollars. They are beautiful and have these beautifully manicured lawns. As I walked I thought, wow, if all of these people had chosen to simply buy a regular sized home of say 200-250K and then donated the rest of the money they are spending on these massive mansions, that could help a lot of people. Meanwhile, I’m over here not tithing like God keeps calling me to do. Not trusting him like I should with my finances. We have what we need. Not usually more, but exactly what we need when we need it. What these people choose to do with their money should not to be of concern to me. Thank you for this post. I needed it!
I wouldn’t want to be too obsessed with care. It is like a part-time job. My girlfriend and I have been fighting over the dog . We rescued and have a therapy dog. She has no idea about what it costs us and the morning walk is hard on my work schedule. That where we have to discussed about the shared duties. In marriage, finance works the same way.
Thank you for your guidance in helping me to declutter. Your kind approach really resonates with me. I have been making progress over the last month and the feeling is wonderful! I subscribed to Clutterfree, and I hope I will still keep getting Minimalist emails from you!
This is great…i feel sorry for those because i am in the weeding business and can’t go on empty hand home. So can’t bring home all what i can take, it can be an issue, some more space as an escape to crowdy & useless expenses become a huge problem with my two grown kids in the house. Does anyone have the same issue?
I am in the free food line driving a nice, relatively new car, because a neighbor gave it to me for $500. He felt that with all we are currently balancing- husband severely under employed, me as an “essential” but underpaid worker, my elderly mother’s health issues, and a son on the front lines – that worrying about our 33 year old clunker shouldn’t be on our minds.
He had the car, we had (barely) the $500. to invest, and so we are gratefully driving it. I know that others- like Laura- are looking down from the cat-bird seat of wonder when I pull up for free groceries. How about just don’t. Don’t let your mind go there.
Be glad instead that someone who needs help with groceries a) is able to get some; and b) is able to drive to work and to the food line without the fear of a major transportation breakdown.
We donated to the food banks and clothes closets all while we were able; and right now, we need the help.
Thanks! LavaidaVandelia
I have been following you for a long time. This is a great post. Decluttering and saving money is best. Some wouldn’t budge on this issue, the shifting may ask discipline.
Yes, “A penny saved is a penny earned”, thanks Joshua.
Thank you for the thoughtful and interesting perspective on this. It’s something I had never considered but have been bothered about for some time – a niggling thought in the back of my head that I’d never taken the time to bring to the fore.
“Is there a moral question to be asked in how much (or how little) I am paying for this service?” This is a GREAT question to ask yourself when negotiating for lawn care, seamstress work, babysitting, etc. This offered service is how this person makes their living (probably), and should be valued as a service you cannot, or will not, do for yourself. To negotiate someone down to what amounts to less than minimum wage just because it is a private contract or that the provider is so hungry for work he/she will take your offer, for me, puts one’s ethics into question. If you are considering hiring for such services, you can PROBABLY afford to add a few bucks to make the monetary compensation a true value for both parties.
Interesting article. I tried to use the construct to think about something that is currently bothering me — global air travel and tourism. While I value learning about other cultures and experiencing the world firsthand (my values), I know that air travel destroys the environment, something I believe to be morally wrong (my ethics). I have no idea how to balance these competing ideas.
I understand your dilemma as I have faced it as well. A great way to help offset the environmental impact of your air travel is to pay a carbon tax, which “charges fossil fuel users for the climate damage their fuel use”. Leonardo DiCaprio actually did a documentary called Before The Flood about climate change and how carbon taxes can make a difference. James Clear, the author of Atomic Habits, has mentioned that he pays a carbon tax for the amount of air travel he’s done for all of his speaking engagements. The more that people participate, the more of an impact it makes!
A very noble and ethical way to look at our global impact. Thanks.
This is the best article about money and spending I have ever encountered. Once again I need to look in the mirror before I look across the street. Everything begins and ends with my relationship with my Lord. ❤️
I do consider how the people/businesses I give my money to spend their money (to the extent I can which is obviously never 100%). I want to help support others who share similar values. That said I don’t (usually) judge those who have different values. I realize I will never know the whole story.
Lots to think about in this article. I also wonder about the societal side of using ethics and values to direct public spending or public policy. Is it ethical not to pay any human a living wage for their labor? How do we access the true value of a person’s work? (Especially pertinent now – when our “essential” workers are usually receiving the least pay). Should the government spend more on public health? Do public budgets solve or exacerbate societal problems? I agree that we should not judge individuals for their values, but certainly as engaged citizens should judge and help decide public spending priorities.
Thanks for the comment Wendy. I don’t disagree that we should be engaged and informed about our local and national governments – especially in countries where we have a voice. I guess the point of the article was that we can’t overlook our own financial ethic in doing so. I can be one voice out of millions in shaping public policy. But I have complete control over every single dollar I earn, keep, or spend. Before I begin making demands of my public policy, I better make sure I’m actually living up to every demand in my private policy first.
I disagree. We should be assessing and working on living up to our financial ethics while holding government up to those standards. If we wait until we absolutely live within our financial ethics then there will be no change in government policy. As reflective individuals we will judge our own failure to meet our standard more harshly than anyone outside. This isn’t to suggest that we should not have a financial ethic and reflect on whether we meet it, but that we should know what our societal financial ethic is as well and continue to speak about its source for us and it’s larger value to society. To do nothing is to abdicate our responsibilities as reflective individuals to those who sit in moral judgment without reflection. I find that morally repugnant as well.
Not only do we want to judge people with more money, we especially love judging people with less (see comment above). Self-righteousness is affirming to our own choices. I would challenge us (me) to apply this advice to everyone, regardless. Basically – MYOB, period.
Yes Maria, you are totally correct. In fact, in my first draft of this article I included that we too often judge people with more and we too often judge people with less. In the end I removed that point – not because I didn’t agree with it, but it became easier to communicate the point I wanted to communicate without that in there. All that to say, yes, I agree. Thanks for adding the comment.
I really enjoyed this article. Thank you for challenging me to think and see the world in new ways.
Outstanding and insightful piece. Thank you.
I am finding financial decisions very difficult now. Our family has suspended our charitable donations for now, but I know this is going to hurt some charities when they need it the most. I have been laid off from work and my husband’s job is precarious, and with 3 kids to look after, we feel we need to save as much as possible in these (very) uncertain times.
So while our ethics (keeping all our money to ourselves) may be questionable, our values (making sure our kids are looked after) seem in line with what responsible parents should do.
I only hope we can make up the donations when things turn around for the better.
You have been making charitable donations, which is commendable. Your first responsibility is to your family. Perhaps some sort of volunteer work is available to you.
In the past, I have not had money for large donations but manage to get my hands on inexpensive fabric and yarn to turn into various useful articles to donate. There is more than one way to give.
I appreciated this insightful post. I have never thought about my personal finances from an ethical standpoint, but it seems like there is a lot of value in doing so. Thank you for this food for thought!
Yep, interestingly, I sometimes let my sibblings and relatives or children to use some funds and help with borrowing. Thats the most I do to show I care and their finance issues are important. Otherwise, having some extra donation and have tax return or not depending, is something that help both ways. So, every end of the year we make this as a big event to help.
Great food for thought today, Joshua. I love it when a whole new way to conceptualize something is laid out. It’s a discovery walk through a garden on a path I never noticed before and I get to see things I thought were familiar from a whole new angle.
Ask yourself this, why are some of those folks in the free food lines today driving Escalades, F150’s etc..
Thanks for the comment Laura. This is the exact attitude I was warning against in my article above.