There are a number of ways you can learn about people by watching what you do. Indeed, it is possible to learn a little bit about yourself by taking a step back and examining your own habits. As you consider what sort of person you are, and the kinds of things you value, it can help to look at your spending as well. You may not realize it, but your spending reflects what you truly value.
Put Your Money Where Your Values Are
Try this exercise: List out the things that you value. Put them in order of importance. Next, look at your spending. This works great if you use some sort of personal finance application, since you can easily generate a report that tells where your money went last month. Get it in graph form for an increased visual punch. Now, look at your spending, and compare that to your list of what’s important. Is there a disconnect?
I completed this exercise a couple of years ago, and was shocked at what I found. I value experiences, but my spending showed that I was buying trinkets to put up around my house. I was running out of room for trinkets — and I didn’t have room in budget to enjoy some of the experiences that I like best. I have a goal to live more sustainably, but my fuel bill showed that I wasn’t combining trips, or planning ways to avoid driving as much. The only thing that did match up was my giving to charity. All of my other spending was clearly out of step with what I value.
Our spending can drift away from our stated values slowly, and we sometimes don’t pay attention to where, exactly, the money is going. From socially responsible investing to saving for retirement to continuing your education, there are a number of goals and values you might have. But if your spending doesn’t line up with them, it can be harder to enjoy life and live up to your ideals.
The key to value-based spending is to decide what’s truly important to you, and then spend your money on those things. Be honest. If you value collecting Lord of the Rings action figures, or enjoy eating out (I love eating out), acknowledge that. If you have a goal to give more to charity, or to save up $1 million for retirement, put that out there. You obviously need to make sure your basic needs (food, shelter, etc.) are met, but then focus on how you can direct your financial resources so that your spending matches your values.
Set aside money for the most important things first. Or, tweak your habits. I have planned my errands much better, and, instead of driving my son to school, I jog with him while he rides his scooter. Now, we spend less on gasoline, and our lifestyle is that much more sustainable. I have also shifted my focus away from things, and avoid buying trinkets just because I like how they look, or because they are on sale. I have more money to set aside for retirement, or to go out to dinner, or to the movies. Those things are more important to me than filling my house with stuff.
Try aligning your spending with your values. When you spend money on things you find important, rather than frittering it away on less important items, you’ll feel more fulfilled. Take care of high priority items first, and you will be less likely to come up short on the things that matter. And, of course, dropping the less important expenses from your budget isn’t such a burden.
Does Your Spending Match Your Values?