How to Define Your Money Values to Achieve Financial Peace of Mind
When it comes to budgeting, the traditional approach of categorizing expenses often falls short in capturing what truly matters to us. Every personal finance app, blog (including ours), and expert will tell you to take the same budgeting step: define your spend categories.
Typically, these categories will take the form of basic labels. You check out at Whole Foods and categorize that as “Groceries”, happy hour as “Restaurants”, and Amazon…well that can be anything.
The problem with these categories is that they don’t reflect what truly matters to us, so when we are budgeting, it’s hard to decide where to allocate our spend. It also can feel restrictive, and when we feel constrained, we’re likely to not follow our plan.
At Habit Money, we think about budgeting categories differently. We believe that defining our money values and aligning our spending habits with those values can bring clarity, purpose, and financial fulfillment.
Habit offers a fresh perspective on budgeting categories, one that gives you clarity and helps you build a budget you’ll actually stick to:
Reflect on Your Priorities:
Before delving into the process of defining your money values, take a moment to reflect on your priorities. Consider what brings you joy, fulfillment, and a sense of purpose. Reflect on these key aspects:
Personal Goals: Determine both short-term and long-term aspirations, such as travel, entrepreneurship, homeownership, and retirement plans.
Core Values: Identify the fundamental values that drive your decision-making, such as family, education, health, sustainability, or philanthropy.
Quality of Life: Envision the lifestyle you desire and the experiences that contribute to your overall well-being and happiness.
Evaluate Your Current Spending Habits:
To gain insights into your priorities, it's essential to evaluate your current spending habits. By analyzing your expenses, you can uncover patterns and clues that indicate your true values.
For example, if you notice that your top spending category is food delivery services, pause and consider the underlying reasons. If it's because you value convenience and time with loved ones, you might categorize it as "Convenience" or "Quality Time." This shift in perspective helps you view your spending through the lens of your values.
Repeat this exercise as you review your credit card or bank statements, noting any recurring patterns that emerge.
Define Your Money Values:
With a clear understanding of your priorities and spending patterns, it's time to define your money values. Follow these steps:
List Your Values: Write down a comprehensive list of values that hold significance to you, such as financial security, freedom, generosity, sustainability, or personal growth.
Prioritize Your Values: Rank your values based on their importance to you. This ranking will guide your financial decisions and help you differentiate between must-haves and nice-to-haves.
Create Value-Based Goals: Set specific and measurable goals aligned with your prioritized values. For instance, if family is a top value, establish a monthly savings target for family vacations or activities. Similarly, if security is essential, allocate more funds to your emergency fund.
Align Your Spending with Your Values:
Once you have defined your money values, it's time to align your spending with those values by:
Budgeting: Create a personalized budget that reflects your priorities and allocates funds accordingly. Categorize your expenses, ensuring that each category receives adequate financial attention based on your values.
Mindful Spending: Practice mindful spending by evaluating whether a purchase aligns with your values before making it. Consider the long-term impact and fulfillment it will bring.
Eliminate Unnecessary Expenses: Identify expenses that do not align with your values and consider reducing or eliminating them. This could involve reducing subscriptions, dining out less frequently, or reevaluating impulsive purchases.
Regularly Review and Adjust:
Keep in mind that financial goals and values can evolve over time – and they should, you’re human after all! It's crucial to regularly review and adjust your approach to stay aligned with your changing priorities and values.
Habit Money provides the tools to support this process, allowing you to personalize your categories, track your spending, and cultivate mindfulness in your purchases. By staying proactive and adaptable, you can ensure that your budget reflects your evolving financial goals and values, and thus will be a budget you ACTUALLY stick to.
