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?
30 thoughts on “Does Your Spending Match Your Values?”
Great post. I am a big fan of value based spending. I think it is the only way you can match your priorities with your budget. For us traveling is really important so we tend to spend a good portion of our money on that. But we save on other things like making our own cleaning and personal care products. We aren’t brand brats. We also spend money on gifts for friends and family because they are really important to us. I think everyone needs to figure out what is the most important to them and then let those priorities guide their budget.
I totally agree with this. One of the positive things about not having enough money to do everything is that you start to see what is most important to you. While we might not have the most luxurious house we are rich in family. We don’t regret a bit of that.
Thanks for stopping by. Yes, it really is amazing to realize what you don’t actually need. Plus, when your spending matches your values, you are more likely to be satisfied with your life, and your financial situation.
I think charitable donations really lend themselves well to this topic.
I liked this post. Everybody is inconsistent in one way or another, but values should lead the way. For instance, if I told my friends I couldn’t go with them for their monthly dinner night, and they saw that I was buying new shoes and sandals on a regular basis, I’d be making quite a statement about how much I value (or de-value) my friends! On the other hand, if I only ate local and organic food and my friends did not want to restrict their restaurant choices, I could make dinner occasionally and have them over instead.
Nice post! A friend of mine and I were discussing this very thing!!
My spending doesn’t totally match my values. Yet. That’s why I’m working so hard to get rid of debt–so I can use that money on things that are important.
One of our personal values is to be debt free. Not own “the man”.
This is a great idea. Take a step back and examine your spending habits. Personally, I really really value reaching financial independence early in life, so most of the time when I make a purchase I simply ask myself if it is more valuable than the corresponding amount of time I am sacrificing in reaching financial independence. If this answer is yes (usually it isn’t) than I don’t hesitate. I hate cooking to be honest, and my significant other isn’t huge on it either, so we definitely appreciate eating out in a somewhat frugal manner!
Value spending? Now, that’s a first! I only knew of value investing. :) Nice post!
We do this exercise (not as an exercise, more implicitly) every month we go over the spending/budget. Sometimes we do struggle for a balance – we would like to support the local farmers, but if the price is too high we hit the chain stores. Skipping farmers market is not exactly value spending, just aligning our priorities with our spending I guess. Other than that our spending pretty much aligns with what we want to spend our money on.
Sounds a lot like us BP. We’re all about Sustainable “Personal Finances”.
I think that balance is always a struggle. But if you figure what is MOST important to you, then it becomes a little bit easier. But I agree that a lot of time it’s about stepping back and honestly evaluating what you want, and whether you are using your money in a way that helps you achieve your goals.
Interesting idea! I am going to have to take a closer look at our spending to see if it matches our values. I know at times we do make choices on how to spend our money based on convenience and that is not always best for the environment.
We try but still need more work on it. I like to think we’re improving little by little. :-)
I hear a lot about “generation y” not understanding the true value of a dollar. I enjoy how this post gives the dollar a different perspective- value, not just money.
I think my generation holds value in personal belongings and experiences. A task such as, “Does your spending match your values” really intrigues me. I feel a greater sense of loss when I see my dollars spent on things I don’t truly value.
Thank you sharing your -valuable- knowledge :)
I love your approach and perspective. I spend to much time thinking about the total dollars in my budget and not where it goes.