What Is a Values Based Budget? A Complete Family Guide

Even on our FI journey with frugal living, I still wasted money on things I didn’t care about. By 2023, that added up to over €10,000 of unintentional, unplanned spending, and blew our budget. The realization left me stunned.

Then I discovered the idea and asked myself: what is a values based budget really, and could it stop this waste? It turned out the answer was yes. Because that’s the essence of learning what is a values based budget—spending with purpose, not out of habit.

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

A values based budget is all about directing your money to what truly matters to you. Instead of letting habits control your spending, you intentionally assign more of your income to the things that support your family’s priorities—whether that’s education, travel, or the goal of financial independence and semi retiring early.

For instance, our family’s goal is financial independence, so we want to invest a large portion of our income.

And that’s exactly what is a values based budget in practice—spending intentionally on what matters most.

The aim is financial alignment: matching your budget with your life goals and core values. That means cutting the expenses that don’t matter, scanning every category for waste, and redirecting those funds into what really matters.

It’s not about spending less on everything—it’s about spending more on what matters most and skip the rest. This practical shift is also the clearest way to answer the question what is a values based budget for your own life.

This is why I love values based budgeting. Yes, you often end up saving more money, but saving isn’t the main goal here. It’s a side effect of aligning your budget with your values. The real power is that this method doesn’t primarily focus on money—it focuses on happiness, fulfillment, and what makes life meaningful. Personal finance becomes exactly that: personal.

Most traditional budgeting methods, like the popular 50-30-20 budget, divide your spending into fixed percentages: 50% for needs, 30% for wants, and 20% for savings. But this doesn’t take into account your unique values and goals.

A values based budget questions the status quo. It challenges your spending habits and your lifestyle choices. It helps you step back and ask: what do I really value, and how do I want to live? Because your life goals are unique, it makes little sense to press yourself into a rigid formula with fixed percentages.

Why Family Values Matter in Budgeting

The Desire Behind Each Value

To make your spending truly reflect your core values, you first need to uncover the desire behind each value. Every value comes from a deeper need you want to fulfill—but often we trick ourselves into thinking we’ve met it when we really haven’t. Let me share a personal example.

One of my strongest values is spending quality time with my kids, ideally outdoors. Why outdoors? Because I deeply want them—and myself—to get fresh air and space to breathe. I spend far too many hours at my computer, and my kids spend their mornings and lunchtime inside at (pre-)kindergarten. What we all truly need is time outdoors without a schedule, especially on weekends, to recharge and reconnect.

But here’s the twist: when I tried to meet that desire, I often arranged play dates. Yes, they were outdoors, sometimes free, sometimes at parks that cost money. Yet they didn’t really satisfy my deeper desire for recreation or fulfill my value of quality family time. It took me a while to realize the disconnect.

And noticing this gap between desire and reality is a big part of understanding what is a values based budget for your family.

The real question became: how do I spend money in a way that reflects this value and meets my goal? And what’s getting in the way?

Exploring these kinds of questions is at the heart of understanding what is a values based budget in practice.

Desire vs. Financial Expression

The desire behind my value of spending quality time with kids is simple: recreation in nature without a fixed schedule. But my financial expression often looks different. I arrange play dates, pay entry fees at a park, and call it “quality time”.

What I enjoy far more is hiking in the woods together, where we can soak in nature and really focus on one another—especially the bond between siblings. That doesn’t mean I’ll never set up a play date or visit a park again. It simply means I need to be more intentional about when I say“ yes”.

Often, we even feel pressure to accept requests from friends or neighbors to let the kids play together. On the surface, it sounds appealing—the kids are busy, and we finally get a chance to talk to another adult. But in reality, play dates often bring hidden stress: getting everyone ready, packing drinks, making sure the children are fed so they don’t beg for snacks the moment we arrive. And then there’s the classic dinner dilemma—rushing back in time to cook a proper meal.

Looking back, I see that this routine didn’t serve my family as I believed it did. Today, I have to block days in our calendar and can confidently say “no” to play dates when I need to—because I know that every “no” means saying “yes” to the unscheduled family time we truly value.

Very often, the way we spend money doesn’t align with our true values or the deeper desires behind them. Take a moment to reflect—does this happen to you? Recognizing this is key to understanding what is a values based budget for your family.

Another common example is how we spend quality time with friends. What we really want is connection and meaningful conversation. Yet the financial expression is usually going out to restaurants or bars—places where it’s hard to talk openly and where the bill quickly adds up. In the end, this doesn’t match our real spending priorities.

That’s the trap: we get stuck in routines that waste money on things we don’t even care about. Unless the food experience itself is what you value, eating out doesn’t fulfill the true desire—having honest, enjoyable conversations with friends.

Of course, I’m not saying you should never eat out. If it brings you joy, it absolutely has its place. But if your true value is spending quality time with friends, then it makes sense to create alternatives. Go out occasionally, but not every time.

This simple reflection shows what is a values based budget at its core: realizing when spending habits don’t match your true desires and choosing options that align with your values instead.

How to Define Family Values to Clear What Is a Values Based Budget

Defining your family’s core values—and learning how to express them through your finances—is where the real work begins.

Start by Identifying What You Truly Value

Many people never defined their own values. Instead, they follow those of family or society. But questioning what you truly value is the first step to seeing clearly what is a values based budget for you.

Determining your values and spending priorities is a process that takes time. Not just a single weekend but often several. Yet it’s one of the best investments you can make, because it gives you clarity on how you want to live.

When I began this exercise, I took a cup of coffee, a pen, and some paper, and simply let my thoughts flow. Within minutes, my core values became clear—and to my surprise, most of them had little to do with money at all, except for high-quality chocolate.

Discuss Values With Your Partner

The next step is to schedule a date night and discuss these values with your partner. Together, you can define the core values for your family. It’s important to get specific. A general statement like “I value family, friends, and meaningful work” isn’t enough. You need to dig deeper to uncover what each of those truly means in daily life. (I’ll cover practical ways to approach this with frugality in this post.)

Involve Your Kids through a Family Meeting

If your kids are old enough, involve them too. It might take longer, but it’s worth it. Explore the true desire behind each value and the financial expression that reflects it. You can even start this in a simple family meeting—even toddlers can surprise you with their insights. My four-year-old regularly reminds me of what she is already capable of understanding at such a young age.

A family meeting doesn’t have to be complicated—it just means setting aside time to talk about what’s important. And while children’s voices are valuable, some conversations are best kept between you and your partner, especially when it comes to setting financial priorities together.

This process of defining values as a couple and then involving your kids later is a core part of understanding what is a values based budget for you.

Questions to Ask to Clarify Your Family’s Values

If you’ve ever asked yourself how to get clear on what is a values based budget for your family, here’s a simple shortcut. These reflection questions will guide you toward values based budgeting and help you build a foundation for budgeting with purpose.

• Where do you want to be in 3, 5, or 10 years?
• Which financial goals and life goals matter most to you?
• What do you want out of life?
• If money weren’t an issue, how and where would you live?
• What kind of work gives you joy and fulfillment?
• When are you happiest together as a family?
• Looking at friends’ families, what do you admire (and would like to adopt as a value)?
• How do you want your kids to feel at home (and which values can create that)?
• What do you already do well as a family (which values can you “check off”)?
• Where are things not going well (and which values are missing there)?

Write your answers individually, then exchange them with your partner. This exercise not only sparks honest conversations but also helps you align spending with values so your money truly supports what matters most. It’s also one of the clearest ways to start understanding what is a values based budget in your own life.

Also, you could even write a family mission statement. I once created mine on a simple card and read it every morning with a fresh cup of coffee. It gave me focus and clarity—and eventually became the foundation for expanding into a broader statement for our family values budgeting.

Skipping this step of clarifying your family’s values often leads to a painful trial-and-error phase—something we learned the hard way in our own journey toward intentional family finances. To make this more concrete, here’s how our family worked through the process of defining what matters most.

How We Started to Define What Matters Most

Our Food Journey: Trial and Error for Years

Early on, we noticed we were spending a lot on food without actually eating healthier. So we tried it all—community-supported agriculture, food sharing, even food saving. Marc would collect surplus food from local supermarkets before it was tossed. Creative? Yes. Efficient? Not always. It was a long phase of trial and error.

What We Should Have Done First

The better starting point would have been one simple question: How do we want to eat as a family?

Today, our answer is clear: real food. We grow as much as we can because the taste is unbeatable; when that’s not possible, we buy from local farmers. Over time, this became a shared passion—farming, self-sufficiency, and home cooking.

Once we named the value, the plan followed. Saving money while eating better became straightforward—and it showed us in practice what is a values based budget really about: aligning spending with the life you want to live.

How We Put It into Practice Today

Even with our small backyard, we planted a simple kitchen garden and blocked out time for cooking together. The kids sometimes join in (especially if chocolate cake is involved!) or just play nearby. To my surprise, they argue less during this time, and the whole family feels more grounded.

How We Repeat the Process

Getting clear on what matters was a game changer. We now apply the same loop to every category: value → plan → spending. It doesn’t feel like sacrifice; it feels intentional. This shift is at the heart of how to start a family budget that truly works. Let’s look at another example.

Our Kid’s Education: Choosing Private School

Another core value is high-quality education. I know its impact firsthand; I only accessed specialized training in my 20s through a bursary because I refused to take on debt. That experience defined one of our family budget planning priorities: giving our children access to excellent education earlier.

Translating that value into a financial plan takes time. So far, we’ve chosen a private Montessori kindergarten next to a Montessori school—an intentional step, even if the full plan is still evolving. That ongoing, step-by-step alignment is how our family continues to answer what is a values based budget in real life.

The Process: How to Align Your Spending With Your Values

Create Awareness through Tracking Expenses

Now that you’ve gone through the “define your values” exercise, it’s time to look at your money. Look at your bills and bank statements from last month and ask yourself: is the way you’re spending money truly in alignment with your most important values, or is something out of sync? For most people, the answer is clear—we’re not practicing conscious spending. And the biggest reason is simple: lack of awareness.

Too often, we don’t know where our money is going. Many families don’t track their spending at all. Even when they do, they rarely sit down to review how they’ve spent their money, talk about what to change, or set clear financial goals together. Does that sound familiar?

To fix this, I strongly recommend using YNAB, a budgeting app we’ve relied on for over a decade. It has transformed the way we track and review our spending—and it’s one of the most effective tools to gain the awareness you need to see what is a values based budget in practice.

This small investment has paid for itself many times over for us. If you’d rather use free tools, you may want to read about Our Pick Of Best Free Budgeting Apps some of which are also featured in Nerdwallets‘ post about The Best Budget Apps.

Building awareness by tracking and reviewing your spending is the very first step in answering the bigger question: what is a values based budget in action for your family.

Create a Budget That Shows What Is a Values Based Budget in Action

Another reason many people find their spending doesn’t match their values is simple: they don’t set a budget.

A budget is nothing more than a plan for your money. It’s sitting down and deciding how much you want—or realistically can—spend on housing, food, transportation, and other essentials.

For example: if you value high-quality food but care little about fashion, shouldn’t your money reflect that priority? And if it doesn’t, where is it really going? Even though financial planning can get more complex, you have to start somewhere.

If you’re ready to take the first step into values based budgeting, you can read our post on Starting a Family Budget That Works and use our free simple budget template down below. It’s designed to help you identify what matters most. This process not only sparks meaningful conversations but also helps you see clearly what is a values based budget and how to align spending with values in your daily life.

Signs of Misalignment in Real Life

Misalignment often sneaks in quietly. In our case, financial independence is one of our top family values—yet there were months when not a single Euro went toward that goal. That’s what misalignment looks like.

Take one example: I set a goal to save an extra 100 each month. But instead, I spent it on impulse buys. In this post, I break down the habits behind impulse spending and share strategies to stop it. These lessons are key if you want to practice values based budgeting, align spending with values, and see for yourself what is a values based budget in real life.

You don’t need to feel guilty about this—misalignment happens to all of us. I fall into it too. A single impulse buy isn’t the problem. The problem is when it turns into a habit that runs on autopilot without us noticing.

Resources to Explore What Is a Values Based Budget Further

If you’d like more support in clarifying what is a values based budget for your family, I suggest starting with a helpful Values Based Budgeting Workbook. It’s from a personal finance blogger who specializes in mindful and intentional spending. It’s a great way to put the principles of values based budgeting into practice.

To dive deeper, here are additional resources worth exploring:

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

If you leave this post with just one new idea for your financial journey, then it was worth it. And there’s more to come—subscribe in the green footer to join our community and never miss the next post.

Before you go, I’d love your thoughts: Have you ever asked yourself what is a values based budget and struggled to stick with it in daily life? Share your story in the comments—your experience might inspire others on the same journey!

Title image source: Jakub Żerdzicki on Unsplash