The following is a guest post from Mandy, who blogs at Money Master Mom. She’s on a mission to help individuals to spend their cash, time and energy in line with their values.
The concept of matching your spending to your values is crucial in reaching your financial goals. Simply cutting your spending is about as effective as just cutting food when you’re dieting. Even the most disciplined individuals will eventually fall off the wagon, and purge with their wallet (or snickers) when they do. If something is too painful or a burden, you won’t keep it up. Human brains are wired to avoid pain and seek pleasure.
Determining Value
If you want to value your spending, you need to increase the efficiency in which you spend money. You need to find ways to spend less cash without depriving yourself. A Toyota Echo or a Toyota Tundra will both accomplish the goal of getting you from point A to point B, but one uses significantly less resources than the other. My value system says go with the Echo, it’s cheaper to buy, cheaper to drive, and easier to park.
The secret to value spending is to focus on what gives you pleasure, and spending as little cash as possible on things that provide little or no pleasure. Bank fees provide me no pleasure or value, so I avoid them like the plague.
Prioritize Your Spending
Once the essentials are taken care of, you’re left with your discretionary income. Your first dollar of discretionary income should be spent on whatever gives you the most value. In our home, internet access provides a lot of value. Derek and I are busy blogging, Madelyn already surfs to her favorite kids’ sites to play games, and Ethan enjoys the shows on pbs.com. We get much more value from internet then our home phone, and if we had to make a decision we’d cut the phone first. A decision I’d surely hear about as soon as my mom figured out how to tweet me, but that’s her values, not mine.
The sad truth is that a lot of us are spending our cash according to someone else’s value system. Marketers use lots of tricks and gimmicks to influence your spending – using guilt or greed. Your kids do the same. Sometimes your friends unwittingly pressure you to spend where you get little value - don’t get me started on home parties. Your neighbors up the game with new landscaping, and a new ride; keeping up with the Jones’ is a low value game you’re guaranteed to lose.
Priorities Are Personal
Your spending priorities and values will change as your life circumstances change. As parents of three young children, date nights are essential to our sanity, but spending a fortune on date nights is not. We enjoy the chance to get away, just the two of us, and try to find a time when Grandma and Grandpa can enjoy some time with the kiddos. I don’t value eating at fancy restaurants, but I highly value not having to cook. So I enjoy getting a pita stuffed with veggies and tzatziki that provides the same value at a ¼ of the cost of the local steakhouse, and has an added bonus of not getting the stink eye from the waitress if we don’t clear the table quick enough after we are finished eating.
Your spending value system shouldn’t be the same as mine. Maybe you’re a truck-loving homebody who hates the internet but enjoys a Wednesday night of watching CSI and a Friday night at the local steakhouse. Good for you for identifying your values! Keep focusing on your high value buys, and cut those low value nuisances, and you’ll see consistent and positive progress before you know it.
Can you think of a low value expense easy to cut?
Crystal’s Comments: I am all about prioritizing. For us, the newest and greatest car is not necessary, but we spend so much time at home that we do indulge there. We also enjoy satisfying food cravings but don’t feel the need to to spend much at all for weekly entertainment or date nights (we don’t have kids yet, lol). I think financial success and life balance is all about prioritization. Thanks for the post!
I agree with having spending values! We don’t want to cut anymore out because we pretty much value everything that is left.
Great job trimming those expenses Michelle!
I agree that things cant be too difficult are you will eventually break. Gradually getting to the point where you are happy with savings and spending takes time. The problem I see though is that spending is usually priority for a lot of people.
This is definitely my wife and I. We living a frugal lifestyle because we have priorities. We love going to nice restaurants and we love to travel. To do that we understand that we need to cut back in other areas.
@Thomas You’re right, most people prioritize spending above all else, including spending less then they make. The unfortunate reality is that eventually their lifestyle (or misguided values) will catch up with them, and they’ll have to cut back much farther then they would’ve in the first place.
@Sean Sounds like you and your wife have found some value in nice restaurants and travel. Love it! Do you mind sharing where you guys cut back to make that happen?
I just had a realization lately that spending a little more on health and fitness was way more satisfactory than a lot of other things.
Great post! It tickled me that you mentioned the Toyota Echo and Tundra as I own an Echo and my parents own a Tundra. They are quite different vehicles!
You definitely need to be aware of your priorities and see if your spending matches it. If it doesn’t consider adjusting!
@budget & the beach – great realization. The great thing about health and fitness is that you can really control your spending by choosing low cost sports or exercise. All the healthy benefits, more money in your pocket. What is your sport/exercise of choice?
@Emily – hahaha what a funny coincidence. We don’t own either, but are thinking about a Prius for our next car, despite be tempted to get the Sienna.
@Lance Great advice, it’s important to always be adjusting your budget because your priorities will always be evolving
We had a priority shift late last year which lead us to kill our debts off(almost there). We just recently had an additional priority shift which is leading us to invest our time in different ways now. Recognizing your priorities are definitely key.
@Adam – Way to go! How much do you have left on your debt?
sorry @adam I meant how much time do you have before you debt is gone
I have about 11k left in debt. If I get a bonus it will be gone by April, if not I expect it will be around June.
@adam wow, you weren’t kidding. You’re taking a sledgehammer to that debt!
Right now I value spending more time at home while my daughter is little. This has caused a major shift in everything during the last year of so to make it possible. I don’t think we could ever go back to our free spending ways, even if I decided to continue working full time.
@Kim – I’m with you! We’ve made some changes to our plans too so I can spend an extra year at home with our kids. I’ve never met someone nearing retirement that said they wished they worked more when their kids were young!
Prioritizing “need” expenses and “want” expenses is always at the forefront of my budget. I never really looked at it in terms of values. We have a home phone that we rarely use but have cell phones that we are hardly off of. I think I will revisit this particular expense!
Having priorities is very important. This is what I had to do and get myself back on a budget and it worked out great for me.
Pam
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