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Budgeting

Start with your values to build a better budget

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Most of us strive to save money and get out of debt. Yet, we often find ourselves buying more things we probably don’t need. We get it—buying new things is fun, whether it’s an awesome new outfit for the weekend or the latest gadget.

And while a lot of financial advice usually offers generic mantras like “Spend less than you earn”, we believe there’s something more to keep in mind. Yes, the dollars you spend are important, but it’s also about how you’re spending them.

If you’re struggling to improve how you manage your finances, it pays to take a look at your core money values. Once you determine whether your purchases truly connect with the things that you care about, you can make more effective decisions about how to use your money. And, for many of us, that may very well be the first step toward getting out of debt and saving more.

Identify your core values

You may already have a keen sense of your core values, but many people haven’t taken the time to reflect or even articulate on what matters most to them. Or, perhaps it’s been some time since you reassessed your values, which could have changed over the years.

Pinpointing core values can be surprisingly tough, but there are a variety of approaches that can help. If you’re looking for guidance, sometimes a life coach or a short meditation retreat can provide some clarity. 

There are also DIY methods that you can start with at home. This could include writing down your greatest accomplishments and failures, as well as the things you’re most and least efficient at, then searching for common themes throughout to direct you forward. 

The goal is to come up with a handful of words or short phrases that are your guiding principles. These aren’t just for financial decisions—your values should also be reflected in the way you choose to live your life and the goals you set for yourself in the future.

Compare your spending with your values

Once you’ve identified your values, it’s time to compare them with your spending. Start by gathering data on your past purchases. You can pull the information from a budgeting app if you use one, or get copies of past bank and credit card statements.

Having each expense on its own line can be helpful, as you can go item-by-item and ask yourself, “Does this align with one of my values?” Try to answer with a “yes” or “no” rather than “maybe” or “kind of”, and then write down the value it aligns with when applicable.

Sometimes, there’s an indirect relationship between a purchase and a value. For example, paying for gas may allow you to get to work, which, in turn, provides income to support you, your family, or your community. If you’re stretching too hard to make something “fit” one of your values, perhaps it doesn't. When that’s the case, you may want to reconsider making similar purchases in the future.

An even shorter version of this exercise involves simply looking at the last 5 things you bought on your debit or credit card. What do these purchases say about you? The main thing here is to identify where and when you’re living your values.

Find less expensive alternatives

Use the information you’ve gathered to reframe your budget, and perhaps even your lifestyle, to better reflect how you ideally want to live. You can always look for ways to cut out expenses that don’t fit. And even with purchases that you feel align with your values, consider any options that fulfill the same want or need but cost less.

For example, you may meet a friend for dinner and drinks once a week and view building friendships as one of your core values. You may even both be foodies, and love trying out new dishes. However, if you agree to alternate cooking together at each of your homes, you can save money, learn new skills, and still get to spend time together.

Automate parts of the process

It may take a bit of legwork to identify your core values and integrate a mindful approach to spending money. But once you’ve got a system in place, you can look for some opportunities to automate certain processes involved.

Budgeting apps that pull in and organize data can make going through your purchases easier. You may also be able to set up alerts that inform you when you’ve spent a lot of money in a specific category, such as eating out or ride sharing. The reminders can be a simple nudge that helps you reevaluate your actions. 

Determining whether your purchases truly connect with the things you care about can help you make better decisions when it comes to money management. And, over time, you may find that your habits change to better align with your values and help set you up to reach your long term financial goals.

Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.

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