Written by: Daniel Crosby, Ph.D.

The journalist James W. Frick once captured something essential about how to honestly read what people actually believe and value; "Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are." American poet/rapper/businessman Jay-Z, may have said it even better, "Men lie, women lie, numbers don't lie."

The principle is so simple it almost sounds like a throwaway line. It is also, when applied seriously, one of the more useful frameworks for evaluating nearly any financial situation. Words are cheap. Spending patterns are not. The gap between the two reveals more about what people genuinely value than any verbal commitment ever will.

This insight has direct relevance for anyone running a business, considering a partnership, hiring an employee, or evaluating any financial relationship. The talk track and the spending track rarely line up perfectly, and the spending track is almost always the more reliable signal.

Consider the small business owner trying to evaluate the health of their company's leadership team, or themselves. The honest test is rarely what people say in meetings. The honest test is what the calendar, the budget, and the cash flow show. The executive who says they are committed to long-term growth but allocates nothing to research, training, or infrastructure is telling you something different than what their words suggest. The partner who says they are fully invested in the business but takes distributions inconsistent with the company's needs is telling you something different than what their words suggest. The team member who says they are dedicated but never reinvests their own development is telling you something different than what their words suggest.

The same principle applies to evaluating yourself. The owner who says their family comes first but cannot remember the last time they took an actual vacation is revealing something. The professional who says they are saving aggressively for retirement but cannot account for where last month's discretionary spending went is revealing something. The household that says they want to leave a legacy but has not updated estate documents in 15 years is revealing something. None of this is a moral failure. It is simply data, and the data tends to be more accurate than the stated intentions.

There is a particularly useful application of this principle in evaluating the businesses you partner with, the vendors you rely on, and the institutions where you place your wealth. Watch what they do with their own resources. The financial firm that boasts about long-term thinking but compensates its leadership entirely on quarterly metrics is showing you what it actually values. The supplier who insists on the importance of relationships but cuts corners on quality during slow periods is showing you what they actually value. The advisor who recommends a strategy for your money that they are not following with their own is showing you something worth noticing.

Behavioral economists have documented an important wrinkle in how this all plays out. When asked directly, people are remarkably overconfident about their own businesses, decisions, and prospects. Researchers John Graham and Campbell Harvey, examining the long-running Duke University CFO survey, found that nearly 90 percent of technology CFOs believed their stock was undervalued near the peak of the technology bubble. The companies in question were, in many cases, weeks or months away from collapse. The executives running them genuinely believed they were sitting on bargains. They were not lying. They were simply wrong, in the way that human beings are reliably wrong about their own situations.

This has direct implications for how to evaluate any financial situation honestly.

Stop asking people what they think. Start watching what they do.

For the small business owner, this means tracking actual spending patterns, both yours and your team's, against stated priorities. The variance between the two is usually where the real story lives. If you say cash flow management is your top priority but spend most of your time on revenue-generating activities while neglecting collections, the priority is revenue, not cash flow. If you say employee development matters but the training budget gets cut first whenever revenue softens, the priority is short-term cost control, not long-term capability. None of these patterns are wrong in themselves. The point is that they are real, and pretending otherwise leads to decisions that cannot hold up.

For the household evaluating any financial relationship, the same test applies. Watch where your advisor's own money sits. Watch how your accountant runs their own books. Watch what your insurance broker carries on their own family. Watch which products your banker uses personally. The information is rarely volunteered. It is also rarely hidden if you ask directly and pay attention to the answer.

For the professional evaluating a job offer, an investment opportunity, or a partnership, the same principle holds. Ask the people involved how they personally are positioned relative to the opportunity. The owner of the business asking you to invest who has minimal personal capital at stake is telling you something. The executive recruiting you to a struggling company who is not personally taking on more responsibility for the turnaround is telling you something. The partner offering you equity who is simultaneously selling their own is telling you something.

A few practical disciplines tend to help.

  • When evaluating any financial commitment, ask what the people involved are doing with their own money on the same question. The honest answer is usually available if you look for it.
  • Periodically audit the gap between your own stated priorities and your own actual spending. Treat the gap as data rather than as failure.
  • Recognize that the absence of action is itself an action. Choosing not to invest, not to update, not to commit, is a choice that reveals something just as clearly as any active decision would.

Words are cheap, and people who talk a good game are easy to find. The behavior underneath the words is the part worth paying attention to.

This week's challenge: Pull your last three months of actual spending — personal, business, or both — and identify one place where the numbers tell a different story than the priorities you would have listed if asked, then decide which version is closer to the truth you actually want to live by.

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