How Determining Your Monetary Value Can Help You Improve Your Budget
When making decisions, who doesn’t think about where exactly their money is going? It’s one thing to stick to strict monetary amounts and percentages that you set for yourself; It’s quite another to understand why you chose those percentages in the first place.
Understanding your personal monetary value is the basis for making meaningful financial decisions. While budgeting often focuses on numbers and categories, determining your monetary value helps you align your spending with what really matters to you. By exploring what you truly care about, you can create a financial plan that will bring more satisfaction and purpose to your life, and help you stick to your budget once and for all.
Why you should try values-based budgeting
I have nothing against the classic 50/30/20 budget – if it works for you, that’s great. However, such a budget locks you into fixed spending ratios that may not make sense for your lifestyle. Values-based budgeting is an approach that puts your personal values at the center of your financial planning. Instead of starting with traditional budget categories, you start by identifying what’s most important to you. Then you allocate your money in a way that supports those priorities.
For example, if personal growth is a core value, you may prioritize spending on education and skill development over luxury purchases. If family connections are important, you may want to allocate more money to family events or travel to visit relatives, even if it means you have to spend less in other areas.
Additionally, this approach makes you more mindful of your spending because you view each expense in terms of what is most important to you. Asking the question: “ Does this align with my values?” before every purchase, you can curb your tendency to impulsive spending. Interest budgets don’t encourage that kind of thinking—thinking that results in saving dollars.
How to find out your monetary value
To begin value-based budgeting, your first step is to determine your monetary value. I define “money value” as the core principles and priorities that guide your financial decisions. These values reflect what’s most important to you and determine how you choose to earn, spend, save, and share your money. Unlike general financial advice, your money values are deeply personal and unique to your life experiences, beliefs, and goals.
Start by listing all the areas where money intersects with your life. Consider:
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Career and income
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Home and lifestyle
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Health and Wellness
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Relationships and family
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Travel and impressions
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Entertainment and leisure
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Pension plans
And so on! Then, for each area you identify, ask yourself deeper questions to figure out what’s most important and how it impacts your financial habits:
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Explore your emotions. What purchases bring you lasting satisfaction? What spending decisions do you regret? What financial choices make you feel proud or aligned with your principles?
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Review your templates. Where do you consistently choose to spend more? What do you tend to prioritize when money is tight? What expenses do you never question?
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Examine your motives. Why do certain financial decisions seem important to you? What experiences from your past influence your financial decisions? How do your spending habits reflect your hopes for the future?
Find themes in your answers and try to name your monetary values. Think about things like “experience and adventure,” “safety and stability,” or “comfort and quality.”
Turning values into actions
Once you have determined your monetary value, use it to create your budget:
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Estimate current expenses. Review your recent expenses and evaluate how they align with the values you’ve set. Look for discrepancies between what you say and where your money is actually going.
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Set goals that align with your values. Create financial goals that directly support your core values. For example, if adventure is a core value, you can set specific goals for saving on travel or new experiences.
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Make intentional compromises. When faced with financial decisions, use your values as a guide. This will make it easier for you to say “no” to expenses that don’t align with your priorities and “yes” to expenses that do.
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Regular checks. Schedule periodic reviews to ensure your spending continues to reflect your values. As your life progresses, your values may change and your financial choices should change accordingly.
Bottom line
Determining your monetary value is a continuous process of self-discovery and improvement. And hey: it’s the season, right? Remember that there is no universal “right” set of money values—it’s important to find and honor values that resonate with your authentic self.
Take the time to learn and articulate your monetary values, and then let them determine your budget. When your spending aligns with your values, you’re more likely to feel confident in what you’re doing with your money.