How I Spend My Money On What Matters Most & Skip The Rest

I had spent a lot of money on things I didn‘t really care about. I just did it habitually. 10 bucks here, 50 there. It adds up. Especially over the course of one year (for us it was €12.000 in 2023). €1.000 per month of unintentional spending. And we kept blowing our budget.

Then I learned about values-based budgeting and started saving that $1.000 a month again and even more. Money I can now use for what matters most. To achieve my long-term financial goals and the long-term goals I have for my life in general. And that feels so good.

Mindful spending and mindful budgeting is quite a journey. But it‘s doable. In this post, you’ll learn how to do it. You will first identify your family’s core values and then see how you can align them with your spending. Also, I will share our family‘s example of approaching the values-based budgeting in several spending areas. At the end of this post, you‘ll find a FREE One Pager with all core messages from this post to download and access to our FREE Resource Library. But for now, let‘s start.

What Is A Values Based Budget? And What Is It Not?

With the values based budget you spend most of your money on what matters most to YOU. You direct most of your expenses towards what you truly care about. If that is education, you may want to assign a significant amount of your income to an education fund. If it is achieving financial independence (to retire early) you might invest a large portion of your income.

Your goal is to achieve financial well-being through financial alignment in life. That is the process of aligning your finances with your life goals and values. Therefore, you cut expenses that don‘t align with your core values. You scan all expense areas that aren‘t important to you. Then you focus your savings from those areas towards what matters most to you and your family. Your goal is to spend your money with intention. On things that matter most to YOU. These things will then become your spending priorities in your budget.

I love this approach of value-driven decisions in ones finances. Because when you do this, you will automatically save more money than before. But those savings are just a nice side effect. Saving money is not the primary goal of this budgeting approach. I would even say in contrary. You just shift your spending and savings from one expense area and budget category to another. You do this so that it makes sense to YOU.

You simply focus on budget alignment as the process of matching your budget with your values and goals. This type of budgeting is the only budgeting method that primarily doesn‘t focus on the money. Instead, it focuses on what makes you happy, what brings you joy, what fills your cup. That is highly personalized. And isn’t that what we all want? I believe personal finance should be personal. But mostly it‘s not.

The most prominent budgeting types are percentage-based budgeting methods like the 50-30-20 budget. Here you spend 50 % on your needs and basic necessities. 30 or 20 % on your wants and luxuries and 30 or 20 % on savings like for your future. These budgeting types are fixed – especially compared to the values based budget.

However, what I love about the values based budget is that it questions your status quo. Your spending habits. Your lifestyle choices. It challenges you to figure out what you truly value and how you want to live. Because, what you want for your life is so unique that it just doesn‘t make sense to press you inside a specific box with certain percentages assigned to your spending.

Understanding Family Values And Their (Financial) Expression

What is the desire behind your value?

When spending money should meet your core values you want to first figure out the desire behind each value. Because behind every value there is a desire you want to fulfill. But very so often we trick ourselves. I will share my experience now.

I value spending quality time with my kids, ideally outdoors. Why specifically outdoors? Well, because I have the desire for them to get in fresh air. And for me too. I sit on my desk at the computer for too long on a regular day. My kids too spend hours every day indoors in (pre-)kindergarten. We all desperately need time outdoors where we can simply relax without having a schedule (especially on the weekends).

Now, let‘s start value assessment. What so I actually do to satisfy my desire for recreation in my free time with my kids? I arrange play dates, mostly outdoors. Sometimes that costs more money (when going to a park) and sometimes less. None of that truly satisfy my desire of recreation or meet my value of spending quality time with my kids. But it took a while until I realized it.

But, how can I start to spend my money in a way that reflects my value and meet my goal? How can I practice purposeful spending in daily life? What‘s hindering me?

The difference between your desire and your (financial) expression

My value is spending quality time with my kids (ideally outdoors). My desire behind that value is recreation while having no schedule. But my (financial) expression for that is another one and it goes like this: So, I arrange play dates to spend time together with my kids and I spend money at a park. But, at least we‘re outdoors.

To be honest I don‘t really like that expression as much as other things. I rather prefer to go hiking in the woods where we can enjoy the outdoors while focusing on one another (especially the siblings between each other). That doesn‘t mean that I will never arrange a play date again or go to a park. It means that I need to make more room and time for what matters most to meet my true desire.

Often our expression, financially speaking, does not align with our true value and the desire we have behind. How about you when you think about it?

Another prominent example is spending quality time with friends. We just want to enjoy their company, right? But the expression is often: So we go out to restaurants (where we cannot even talk openly about everything we‘d like to as we‘re in public). And I also spend quite a bit of money on that. Which doesn‘t even meet my spending priorities.

The problem is that we habitually end up „wasting money“ on things (eating out at restaurants) we do not even care about (unless we want that food experience every time). So, we will never satisfy our true desire (having real conversations) behind our value (spending quality time with friends).

You see, I am not saying you should never go out at restaurants. Maybe eating out brings you joy. But, if you actually want to enjoy your friends company and have some real conversations (maybe unsuitable for the public) go for it. Yes, you can still eat out, occasionally. But not every every time you wan to actually enjoy your friends company. The point is to break with the ritual that doesn‘t meet your true desire.

When this is you, you need to find a new (financial) expression that better meets your desire and value of spending quality time with your friends. Go ahead and talk to them. Propose that they come over for home-cooked dinner or cookies and coffee.

How To Define And Discuss Family Values

Determining what your and your family‘s core values are and figuring out how to best express those, that‘s where the true work is. You need to first identify what you personally truly value to then determine your spending priorities. That will take some time. Not just a weekend but several weekends. It is a bit of a time investment. But to be honest, that was one of the best time investments I have ever made. Because now, I have clarity for how I want to live and spend my time and money.

Then, you and I need to discuss those identified values with our partners to define what our family‘s core values are. It‘s about getting specific. Just saying I value family and friends and having a fulfilling work is not specific enough. We need to dig deeper here. We will talk about that in the next blog post in more depth.

If your kids are old enough you can engage them. That might take even more time. You might need to dig deeper on a specific value. On the true desire behind and the (financial) expression that makes sense. You can do this in a family meeting and involve your kids even if they are toddlers. My little one always surprise me what she is capable of understanding at age 4!

Family meeting is just a fancy term for periodically sitting down and talking about things that are important. And even if it‘s great to involve your kids. There are some conversations that should happen just between you and your partner like the following one.

I value high-quality education for my kids. That‘s because I enjoyed such an education myself. But, it was quite late: in my 20s. It‘s not that I didn‘t have a great school and mostly caring teachers. I had. But I wanted more. I wanted a specific high-quality education in my professional field of choice. So, I had to get a bursary. There was no other way to cover the high costs of my desired education (in the field of journalism) despite taking on debt (which I denied to do).

I‘d love my kids to have access to such kind of high-quality and profound education earlier in life. So that is one of my family‘s spending priorities. Now, the big question is how to (financially) express that desire. We‘re still figuring it out. But the point is, we‘re about to figure it out.

Questions To Ask To Define Your Family‘s Values

Here are some questions you can ask when defining and discussing your family‘s core values.

1. Where do you want to be in 3, 5, 10 years from now on?
2. What are the financial goals and life goals that are most important to you?
3. What do you want out of life?
4. If money would not be an issue, where and how would you like to live?
5. What (kind of work) brings you joy and fulfillment?
6. When are you the happiest (as a family)?
7. When thinking about your friends families‘, what do you admire (and want do adapt as a value)?
8. How do you want your kids to feel at home (what value can bring you closer)?
9. What do you already do well as a family (what value can you „check-off“)?
10. What are areas you are not doing well (what‘s the value this results into)?

Write your answers down. On a paper. Every partner on its own. Come together and switch pages.

That exercise can be a quite enjoyable experience. It will open up the room for some honest discussions. We haven‘t done this in the beginning. That resulted in a long and painful trial and error process of what it is that truly matters most to us.

You could even consider to write down a mission statement. I have done this myself on a nicely designed card. For a while, I‘ve read it every morning in peace and quite with my freshly brewed cup of coffee. I can tell you that it makes all the difference. My mind was so focused and clear during that time. But, I mostly had written out a mission statement for my professional life as that needed more of my attention. However, it was a great starting point to expand that mission statement.

If you have a command center in your home with a calendar or so that would be a great place to pin your mission statement card. Everyone has access to it and what‘s most important: it‘s prominently visible.

How To Align Your Spending With Your Values

Now, that we have done the „define your values“ exercise, I want you to think about your money for a moment. Is the way you‘re spending your money in alignment with the values that are important to you? Or is something not lining up? For most of us, that‘s the case. We are not practicing conscious spending and financial integrity. Due to several reasons.

One is awareness. We are simply not aware of where our money is going to. Most of us do not track our spending. And even if so, we rarely take the time to review how we had spend our money (as a couple). Or to talk about what we want to change or even set money goals for ourselves. How about you?

I can highly highly recommend Ynab as an online app to track and review what you spend. We‘re using it for around 10 years now and couldn‘t be happier. Honestly. Create. Your. Account. Now. This small investment is worth every penny. Marc will share his years-long experience in an article series about Ynab to come. If you prefer free budgeting tools you may want to read about Our Pick Of Best Free Budgeting Apps For 2024 some of which are also featured in Nerdwallets‘ post about The Best Budget Apps for 2024.

Being financially aware (by tracking and reviewing our spending) is the first step to go from just spending money mindlessly and impulsive to intentional and mindful spending.

Another reason why our spending is not lining up with our values is that we set no budget. A budget is simply having a plan for our money. We sit down and determine how much we want (or can) spend on housing, food, transportation and so on. For example, if we value high-quality food but have no passion for fashion, where should our money go? Where does your money go? And even if financial planning goes beyond that we need to start somewhere.

If you want to create your first (values based) budget, you can take advantage of our free (!) simple budget template. It‘s a great starting point to define what matters most to you. If you get a copy of this budget template you will have 7 main expense areas to write out your most important expenses line by line. That gives you room for conversations if your current expenses are in line with your values.

The last reason why we are often not spending our money in alignment with our values is that we have never really thought about our values. Most have adopted the values ​​of their family or society. Few of us asked whether these are the values ​​we want to live by. But that‘s what we have to do if we want to live a full-filled family life.

How Mis-Alignment Can Show Up In Real Life

Let‘s talk about how a mis-alignment can show up in real life. I will share my example here. Achieving financial independence is an important value for my family. But, we had our moments when there was NO (!) money going towards that goal. That was a mis-alignment.

It looked like wanting to increase our savings by an extra 100 per month. But, what happened is that the month went by and I had spend 100 on impulse purchases. I share with you everything I‘ve learned about impulse shopping and strategies to stop in the blog post How To Stop Impulse Buying And Save Money In 2 Simple Steps.

Now, I say this not to make you feel guilty but to see that you‘re not alone. Mis-alignment happens to all of us. It happens to me too. An occasional impulse purchase is not the problem. The problem is the consistency of impulse shopping and this spending habit we created without us even realizing it. We now do it habitually.

Continuous small mis-alignments add up tearing us off course from the life we actually want to live and the values we want to express. This is true for every expense area. In my budget. And yours too maybe. But it‘s worth changing it.

Further Resources

If you look for additional help, specifically to start your own values-based budget you may want to check out this Values Based Budgeting Workbook from personal finance blogger Kara. She‘s all about mindful and intentional spending.

If you want to further explore and learn about values based budgeting, I can recommend the following resources:

1. YouTube / Podcast Episode Spending and saving where it matters
2. The FrugalFriendsPodcast
3. The Frugal Friends‘ Book Buy What You Love Without Going Broke

Here are also the resources mentioned so far:

1. Ynab is an online app to track and review what you spend.
2. For more paid and free expense tracking software, check out these articles: Our Pick Of Best Free Budgeting Apps For 2024 and The Best Budget Apps for 2024.
3. You can also browse our FREE Resource Library and get your copy of our FREE budgeting templates.

If you want to try YNAB, you can use our referral link to test YNAB, a powerful tool to create a budget on your computer or on the go, using the mobile app. If you subscribe after your trial period, you and we get a free month of YNAB.

When you walk away today with at least one new idea to improve your personal financial journey I’d love to show you some more in the next posts. If you haven’t already, you can apply to become a part of the community to not miss any new release below in the green footer.

Now, I’d love to hear from you: Have you ever struggled with sticking to your budget and vale-based living and why? Let me know in the comments below!

Title image source: Jakub Żerdzicki on Unsplash