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Start With Your Values to Build a Better Budget

March 30, 2018

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You say you want to save money and get out of debt. Yet you find yourself buying yet another thing you probably don’t need. We get it—buying new things is fun, whether it’s an awesome new shirt to wear for the weekend or a new electronic gadget.

And while a lot of money advice usually offers very generic mantras like “Spend less than you earn”—we believe there’s something different to think about too. Yes, the dollars you spend are important, but it’s also how you’re spending them.

So if you’re struggling to get right with your money plan, 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 decisions about the most effective way to use your money. And that may very well be the first step to getting out of debt and saving more money.

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, it may have been some time since you thought about this and your values could have changed over the years.

Pinpointing core values can be surprisingly tough, and there are a variety of activities that could help. If you’re looking for guidance, maybe it’s time to talk to a life coach try a short meditation retreat to get some clarity. There are also DIY approaches that you can start with at home.

Kevin Daum, a serial entrepreneur and author, shared his personal values in a column on Inc. and has a simple exercise you can try. It involves writing down detailed accounts of your greatest accomplishments and failures, as well as times when you’ve been most and least efficient, and looking for themes.

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, gather 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 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 write down the value it aligns with when there is one.

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 gives you income to support your family and 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 five things you bought on your debit card. What do these purchases say about you?

Find less expensive alternatives

The exercise can help you identify where and when you’re living your values. You can use this information to redo your budget, perhaps even your lifestyle, to better reflect how you ideally want to live. You can look for ways to cut out expenses that don’t fit. And even with purchases that you feel align with your values, you could look for options fulfill the same want or need but costs less.

For example, you may meet a friend for dinner and drinks once a week and value building friendships as one of your core values. You may even both be foodies, and love trying out new dishes. However, if you agreed to cook together at one of your houses, you could 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 processes. Budgeting apps that pull in and organize data can make going through your purchases easier.

You may also be able to sign up for SMS Alerts that can 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. And over time, you may find that your money habits change to better align with your values.

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Louis DeNicola is a freelance personal finance writer and credit enthusiast. You can find him on Twitter @is_lou

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Louis DeNicola

Louis DeNicola

Louis DeNicola is a freelance finance writer based in Oakland, California. He specializes in consumer credit, personal finance, and small business finance, and loves helping people find ways to save money. In addition to Varo, Louis works with a variety of financial services firms, credit bureaus, and educational websites, including Credit Karma, Wirecutter, Funding Circle, and Experian.

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