In his fantastic book “Think Again,” psychologist Adam Grant emphasizes the importance of defining our identity in terms of our values, rather than our opinions. 

This makes so much sense, but is often not practiced — mainly because values and opinions are so easily mixed up. Reading this book got me thinking about the way that financial values and opinions can get mixed up too, even for me. And how that can impede our financial success and journey to financial freedom.

The Difference Between Values and Opinions

Adam Grant defines a value as something intrinsically significant. Values are principles you choose to live by, even when they go against an opinion or even certain personality traits. Grant emphasizes that values should be memorable, encourage honesty and loyalty, and guide you in a positive direction. Values can also cover broad situations, far more than any set of rules.

This is in contrast to opinions. Basically, opinions are what you think is true. And values are what you think is important. 

Because of my passion for financial freedom, as so often happens, I started to think of this lesson — that you should define yourself through your values, rather than your opinions — through the lens of personal finance.

Not surprisingly, the same structure holds in this domain as well. Opinions, when mistaken as values, can really take us down the wrong path and hinder our progress. That’s because our opinions are largely our ideas. And we need to have an open mind and accept that our ideas can change over time. Meanwhile, values represent our core. If we mistake an opinion as a core, we risk defining ourselves not by openness but by closing off our mind.

The challenge here is that values, and opinions, are individual by nature. So, I can’t tell you what your financial values should be. Nor can you tell me. 

However, I am hoping that by sharing my financial values centered on important aspects of personal finance, along with corresponding and conflated financial opinions that I hold or have held, we can all help each other to better define our financial path and success.

My Top Financial Values and Opinions

In no particular order …

1) Debt

My financial value: I need to build assets and eliminate liabilities. 

Assets are things you own that put money in your pocket. Liabilities are things you own that take money out of your pocket. In the net worth equation that serves as our best measurement of wealth, assets are the heroes and liabilities are the antagonists. Therefore, to build net worth and progress on the path to financial freedom, I value building assets and eliminating liabilities. The biggest liabilities are bad debt in the form of student loans, mortgages on non-cashing flowing properties, and commercial debt like credit card debt.

My financial opinion: All debt is bad.

Liabilities are bad. This financial value will serve us all well. And the biggest liabilities tend to be debt in some form. This led me to form an opinion: that all debt was bad. As a result, when introduced to the concept of real estate investing via cash flowing rental properties that carried mortgages (i.e., debt), I initially discarded the idea. However, through self-education, I eventually recognized the difference between good and bad debt, understanding that this type of debt paid me to hold it, helping me to build assets. And this aligned with my financial values above. Thus, my wife Selenid and I started investing in real estate (and continue to do so) which thus far has greatly accelerated our wealth building.

2) Investing

My financial value: I will invest in vehicles that offer reliable, long-term risk-adjusted returns.

The goal of investing is to have your money work for you. This means that you place your money into an investment vehicle and, over time, that money reliably increases in value. Now, the one maxim of investing is that a vehicle with greater potential reward also carries greater risk of loss. Otherwise, with no risk, everyone would invest in it and the reward would be mitigated. Or, conversely, with too high risk, no one would invest in it and the reward would be outlandishly high, until more people started investing and it became less risky. So, my value is to invest in vehicles with a long track record of long-term growth that is favorably adjusted to the risk involved. 

My vehicle of choice is diversified, low cost index funds via a passive investing approach that has been academically proven to beat active investing approaches.

My financial opinion: Crypto is a bad investment.

I recently ran an April Fool’s Day post on my blog about how Selenid and I were investing heavily into cryptocurrency funds. I got some pushback from big crypto believers that I was lame and missing out. And my initial reaction was to poo-poo them. However, as I reflected more, I realized that I was holding too tight onto my opinion that crypto is not a good investment due to its short track record, questionable practical utility, and volatility. Right now, I don’t feel that crypto aligns with my overarching investing financial values. But that could change. And if it does, I would be foolish to pridefully avoid it simply because of not wanting to let go of an opinion. That would only hold me back.

3) Saving

My financial value: Maintaining a savings rate of at least 20% is the foundation of my financial success.

The formula to build wealth is very simple. You need to create and grow the margin between what you earn and what you spend. This margin is your savings rate. You then use that savings rate to invest and grow your money so that, one day, you have enough of a nest egg to cover all of your expenses via a safe withdrawal rule and you can live on your own terms. You can practice medicine because you want to, not because you have to. And, very simply put, the best investment plan in the world is useless if you have no money to invest. The savings rate is the key to everything.

My financial opinion: Spending money is bad.

If the key to reaching financial freedom is spending less money than you earn in order to create a savings rate, well, it’s easy to see how I formed the opinion that spending is bad. As a result of this, I continue to have a very difficult time spending money on things (even though I still buy a lot as well). This frugality can be an issue — it can lead to fights and disagreements, and it can result in missing out on opportunities. 

Still, I know that money is only good for the joy that it can bring you, your loved ones, and the world at large. (In fact, that is another of my financial values!) So, I continue to work hard on letting go of this opinion that actually hurts me on the journey to financial freedom.

My hope here is that by sharing the financial values that guide my path to financial freedom along with the financial opinions that hold me back, I can illuminate how difficult yet important the job of differentiating the two can be. And just how crucial it is to let our financial values be the ones that guide us down the path. 

I encourage you to take some time, alone or with a partner, to think about what your financial values are and how they are serving you on your path to financial well-being. And also to think about any financial opinions you may be holding that are hurting you now or can hurt you later on in the process.

What financial values and opinions do you hold? Share in the comments!

Jordan Frey, MD is a plastic surgeon in Buffalo, NY at Erie County Medical Center and the University of Buffalo. His clinical focus is on breast reconstruction and complex microsurgery. He is also the founder of The Prudent Plastic Surgeon, one of the fastest growing finance blogs. There, he shares his journey to financial well-being with a goal of helping all physicians reach financial freedom, practicing on their own terms.

Illustration by Jennifer Bogartz