Value-based Spending: 5 ways to Stay on Track and Budget with Purpose

Published:May 25, 2021 | Finance 理財視野, YOU!

In last month’s article, I looked at how to align your spending with your values and create a set plan for giving back through charity.

In this instalment I want to take a step back from thinking about philanthropy and take a broader look at budgeting with purpose.

Far too often, we overlook our values and spend in frivolous ways- leading to a disconnect between what we believe in and where we actually spend our hard earned money. For instance, we may value the environment, but in our haste at the store not realize we are overbuying plastic wrapped items and products with harmful chemicals.

That is why it is important to spend time to really think deeply about what our values are and how we can better incorporate them into our financial plan.

Living in alignment with your values significantly reduces self-judgement, which reduces stress and improves mental well-being. It can also provide you with the courage and conviction to stand up for yourself and live a more fulfilled life.

Here is a 5-step process to align your spending with your values:

Define your values

WELL, first off, what are values? According to the Co-active Training Institute, where I trained to become a professional coach, and an authority on values-based coaching:

“Values represent who you are right now. They are principles that you hold to be of worth in your life. People often confuse values with morals. Values are not chosen. They are intrinsic to you. Your individual values are as distinctly yours as your thumbprint.”

With that definition in mind, think of what things in your life you consider inseparable from your identity. You can start by asking yourself some questions:

“Imagine doing the activity that brings you the greatest joy, what would that be?”

(What values come to mind when you visualize this?)

“What is present when life is most ALIVE for you?”

(What values come to mind when you are most alive?)

Here is a list of broad list of values to provide you with inspiration: “MAD Success – List of Values”. If you’ve never really considered your personal values, defining them can be difficult at first – reading some examples may help.

Write down your values

Now that you have had a good brainstorm and read through the “MAD Success – List of Values”, it is time to put pen to paper!

As an exercise, write out what you believe are your Top 10 Values and prioritize them in order of importance. You might start by highlighting all of the values that stand out for your on the “MAD Success – List of Values”, and then push yourself to choose only ten.

Once you’ve completed your personal Top 10 Values list, read the list back to yourself out loud to make sure they truly resonate with you. This list is not set in stone, so if one or more values don’t quite sit right, change them.

Rank your values

Now that you have your Top 10 Values list it’s time to see if you are actually living them.

Rank each of your values on a scale of 1 – 10, 1 being not present, and 10 being fully present in your life.

Ranking your values helps you to truly gauge how your values are showing up in your life, and which values you need to work on more fully. If you’ve rated a value any number below 7, i.e. from 1 – 6, that value is not very present in your life. What do you need to do or change in your life to raise a value ranked a “3”, for example, to a “4” or a “5”?

Striving for incremental changes in one value to begin with is a lot more achievable than trying to change them all at once.

Compare your values with your spending to identify areas for improvement

After ranking and rating your values, notice the values that need more attention (those rated from 1-6, out of 10) in order to be more fully present in your life. Then reflect on why these lower rated values are missing or have not been prioritized in your life.

What do you need to do or change to raise the rating of a value in your life?

For instance, if friendship is a value you treasure, but connection to your friends is lacking, it’s time to make a plan to spend more time and money on maintaining relationships, which probably means budgeting money for eating out or travelling to see friends.

With regards to aligning your values with your spending (values-based spending), here’s a straightforward exercise you can perform monthly:

Print out your most recent credit card statement (or budget if you have one) to get an overall picture of where and how you are spending your money.
If you value “sustainability”, for example, and you care about green transportation but you’re spending HK$3,000 / month on gasoline, it would appear that your values are not in alignment with your spending.
What changes could you make to bring your spending on a car more in alignment with your “sustainability” value? You could, for example, sell your gas powered car in favour of an electric car, or take the bus.
Now try this exercise to compare your values against your spending patterns and see how you can live more in alignment with your values.

Write down goals to address the imbalances

Create a goal to address a values-based imbalance. If you values of “friendship” and/or “sustainability” from our examples above are out of balance, what can you do to bring your life more in balance with your values?

If you are struggling with friendship for instance, you could set a goal clearly defining how many times per week you will see your friends, when you will see them and when you will contact them to set-up the meeting.

You will also want to check how much you will spend on transportation, coffee, drinks, meals, and entertainment with your friends, against your monthly budget.

Is there anything that you need to give up in order to have more time and money to meet with your friends? Can you identify any poor spending habits where you can cut costs, such as impulse shopping on-line, in order to values-based spend your money to achieve the goal of seeing your friends more often?

By writing your goals down with clear targets and timelines, the greater the likelihood of successfully achieving your goals. Values-based living will keep you in alignment of what matters to you in your life, aligns your spending and budget with your values, and empowers you to stay on track each month.

Bonus- Don’t sweat the small stuff

As part of this process, be mindful not to overwhelm yourself. We ALL make mistakes. This is a journey, a process, and if you start thinking about the impact of values on your decision-making, you are already moving in the right direction.

Values-based budgeting is all about planning for / budgeting for those goods, services and experiences that matter to you, that you value – so you are spending on things you really care about. This is NOT about limiting what you do, but ensuring that you budget and spend on things that you value, as opposed to spending on things you don’t need and don’t value, thereby reducing guilt, stress and anxiety when you do spend your money.

If you’re able to adopt my values-based living suggestions, you will gain control over:

how you spend in alignment with your life values;
the impact over which companies will profit from your purchases; and,
your impact on your community, the environment, the climate, animal well-being and your personal contribution to pollution.

You are in control of your life and your impact in the world when you budget and spend in alignment with your values.

This is powerful stuff, folks. Who knew basic personal finance could be so empowering!

About the author: Lachlan Campbell’s purpose, his “Why”, is to help people live the life they want, their way. He founded MAD Success Limited, because he believes everyone should live a happy, healthy, wealthy, more fulfilled life. As experts and thought leaders in Wellness, MAD Success offers workshops, seminars, courses and coaching for individuals and corporates. Lachlan is available for local and international professional coaching, consulting, and speaking engagements on such life fulfilling topics as Creating a Life or Financial Plan, Career, Leadership, Entrepreneurship, and Wellness (holistically combining Mental, Physical & Financial Well-Being). Email: GetUnstuck@MADSuccess.com

Written exclusively for WELL, Magazine Asia by Lachlan Campbell