Your core values are the things that are important to you, they influence how you live your life.
Your financial values are what motivates the various decisions you make around your money. They guide your spending. When I create a budget, I am basing it off my values. This is what’s known as value-based budgeting.
Understand Your Values
To understand your financial values, start by looking back to your early childhood memories around money. What money beliefs were you taught as a child? A lot of times our childhood memories will influence our spending habits and our relationship with money. That’s why it’s so important to help your children to build good financial habits from an early age. Look back to my previous post on teaching financial literacy to children to get more information on this. Recognise any bad habits you may have around money, were they created in your childhood? What was your parents’ relationship with money like, were they spenders or savers? Did your family struggle financially when you were growing up? Did you have a dependable person you could go to for financial assistance growing up or did you always have to rely on yourself? All these experiences impact your relationship with money.
When creating a value-based budget, you’re not just looking at the figures you need for your regular outgoings, you are also examining and prioritising what it is you enjoy spending your money doing. By examining your values and spending, you can see where changes need to be made.
Make Sure Your Spending is In Line With Your Original Intention
You may value quality time with family as your number one priority and arrange to do something each month to spend extra time together. Be mindful when arranging your family outings that you meet your goal of quality time together. The original intention is to spend quality time with family, and this can be done in many ways, not just expensive outings.
It is good to be aware of this because you may also regard financial security to be important. Financial security involves having savings to provide protection for you and your family in times of unexpected financial expenses. If you are spending too much on family outings, then it can end up being impossible to save.
Being mindful of this will ensure you are spending on what you value most – which is time with family – and have money left over to save for those unexpected financial outlays that may pop up.