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.
Linda says
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. ❤️
Julie says
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.
Wendy says
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.
joshua becker says
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.
Meg says
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.
Maria says
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.
joshua becker says
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.
Stephanie Hahn says
I really enjoyed this article. Thank you for challenging me to think and see the world in new ways.
Wendy K. says
Outstanding and insightful piece. Thank you.
Sandra Richardson says
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.
Judy says
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.
D says
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!
Judy says
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.
Elizabeth says
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.
Laura says
Ask yourself this, why are some of those folks in the free food lines today driving Escalades, F150’s etc..
joshua becker says
Thanks for the comment Laura. This is the exact attitude I was warning against in my article above.