Use a Value-Based Budget to Put Your Money Where It Is Needed
No matter how much financial advice you get, no one can ever tell you what matters to you. When you’re budgeting, make sure you keep your own values in mind when deciding where to invest.
As the personal finance site Life and My Finances explains, most budgets tend to divide your money into different buckets without really thinking about whether or not those things really matter to you. A good budget might suggest spending 30% of your income on housing, but if your home is the most important thing in your life, you might want to spend more. Conversely, if your home is just a place to relax between your many out-of-home excursions, you may be better off spending less on accommodation and more on your travel budget. What you value will determine where your money should be spent:
This one really changed the rules of the game for me because it helped me understand that freedom to me simultaneously looked like a salvation in case of emergencies and a road fund. Basically, it taught me that the two can coexist.
In addition, and perhaps more importantly, it helped me save money because I avoid spending on things that I don’t care about or just don’t make sense to me right now. For example, I don’t really appreciate the car, so I don’t have one. The money then goes to things I really care about, like travel or getting back into my business.
Obviously, you should still think seriously. Budgets are designed so that you can maintain your lifestyle, not just spend money on what you have that day. However, if you’re on a budget that doesn’t reflect your values, it probably won’t improve your life the way you want it to.
Why Traditional Budgets Don’t Work | Life and my finances via Rockstar Finance