Where’s your money going? Learn three steps to spend money on what’s important to you with value-based spending.
If you’re tired of never having money for what’s important to you in life, then this is for you! You want to buy an electric car, travel, or start a business, but instead find yourself shopping on Amazon at 2:00 a.m. buying one more kitchen gadget (you’ll use once a year at best!).
Find out:
- What’s value-based spending?
- How to define your core values
- A simple process to see where your money’s going now
- How to adjust spending to reflect your values
What’s value-based spending?
Whether you’re aware of it or not, whatever’s important to you, you’ll spend money on it! For example, if you’re in a bad car accident and break multiple bones, you’d go to the hospital to restore your health, no matter how tight money is!
Or if someone broke into your house in the middle of the night and violated your sense of safety, you’d find a way to pay for a security system. If the break-in was so traumatic you might even pay to move neighborhoods.
Travel is a value and important to me! I finished a month long RV road trip to Grand Canyons and up the Pacific Northwest😊.
Money is the currency of the heart.
This takes the idiom, ‘put your money where your mouth is’ to the next level. You can’t measure love or emotions, but what’s going on inside you spiritually trickles down through what you spend money on.
A more simplistic example of this is when I’m about to start my period I feel irritated and hypersensitive. Those feelings result in me buying desserts or comfort food as a coping mechanism🤪!
You are what you spend your money on.
If you write out everything you spend money on in a month, a stranger could tell your age, gender, relationship status, hobbies, interests, and values.
For example, a new mother spend money on diapers, baby clothes, toys, and babysitters. Or for a single girl into fitness, you’d see money going to yoga classes, health food stores, and Women’s Health magazines.
Hopefully you’re convinced with the basic correlation between spending and your values.
Three Steps to Find out Where your Money’s Going: Value-Based Spending 101
If you constantly feel like you can’t spend money on what’s important to you, then you’re out of sync! You feel frustrated and defeated. The good news is you can make a few adjustments to get your money where your heart is with these three steps.
1. Define your core values
To align your spending and values first get clear on what exactly your core values are.
Here are examples of values:
Safety and security- basic human needs are met with shelter, clothing, and food. You’re free from danger and can avoid harm.
Freedom- free will to choose how you live. You can walk away from a toxic work situation, retire early, or take a sabbatical when you experience burnout.
Education- informed and always learning new thing. You understand the stock market, know what you’re investing in, and are aware of how mortgages work, etc.
Accountability and integrity- the ability to set goals and keep your commitments to do what you say you’ll do like pay off debt, invest, pay for a vacation, buy a home etc.
Here’s a thorough process on how to define your personal core values.
2. See where your money’s going now
The next step to aligning your spending with your values is to see where your money’s going now. A quick look logging onto your bank account won’t cut it.
You need to see exactly where every single dollar goes in a month. The best way to do this is to fill in a Statement of Cash Flow. This is one of the three financial statements (I freakin’ love financial statements!).
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Your Statement of Cash Flows shows cash inflows and outflows in a month. In other words, in a spreadsheet fill in your paychecks coming in and expenses going out. It’s a tedious exercise, but worthwhile!
Fill in your transactions from all your accounts (bank accounts, credit cards, and store cards). I like to categorize expenses too!
Here’s an example of what this looks like:
This is the exact spreadsheet my students use in Best Money Class Ever, my signature 4-week personal finance class. If you want access, the next class starts Oct. 6th. Get the details here and enroll now.
3. How to adjust spending to reflect your values
After you enter all your transactions, you’ll see a very clear pattern of where your money’s going. Lastly, it’s time to modify your spending to be in sync with your values. To do this ask yourself, “if I am what I spend my money on, then what would I be?” More importantly ask yourself, “does that fit your values?”
One Best Money Class Ever student filled in her Statement of Cash Flow and realized if she was what she spent money on, then she’d be Target!
She had a clear pattern of getting stressed at work and then going to buy new jewelry, clothes, shoes, etc. at Target. As much as she loved Target, Target wasn’t a core value to her.
This exercise will ignite a fire within to make a change.
If you want financial security and see all your money is going to Amazon (for purchases you can’t even remember making), then stop making Jeff Bezos richer. Instead, learn how to invest and see your money work for you!
You can gain control on where your money goes and spend money on what’s important to you.
Use these three steps to see where your money’s going. Start spending based on your values!
P.S. If you liked this post, then share it with friends, family, or coworkers who also geek out on personal finance.
