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.
Christy Blocker says
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!
Andy says
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.
Abigail says
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!
jonahan says
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?
Lavaida says
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
Heidi says
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.
Lisa says
Yes, “A penny saved is a penny earned”, thanks Joshua.
Katherine says
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.
Renee says
“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.
Bette says
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.
Hanah says
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!
Renee says
A very noble and ethical way to look at our global impact. Thanks.