In a time of resolutions, who doesn't reflect on where, exactly, their money goes? It's one thing to stick to strict dollar amounts and percentages that you set for yourself; it's another to actually understand why you picked those percentages in the first place.
Understanding your personal money values is the foundation for making meaningful financial decisions. While budgeting often focuses on numbers and categories, identifying your money values helps you align your spending with what truly matters to you. By exploring what you genuinely care about, you can create a financial plan that brings more satisfaction and purpose to your life—and helps you stick to your budget once and for all.
I have nothing against the classic 50/30/20 budget—if it works for you, that's great. However, that sort of budget locks you into fixed spending ratios that may not make sense for your lifestyle. Values-based budgeting is an approach that puts your personal values at the center of your financial planning. Instead of starting with traditional budget categories, you begin by identifying what's most important to you. Then, you allocate your money in ways that support these priorities.
For example, if personal growth is a core value, you might prioritize spending on education and skill development over luxury purchases. If family connection is essential, you might allocate more money to family activities or travel to visit relatives, even if it means spending less in other areas.
Plus, this approach adds mindfulness to your spending as you consider each expense in relation to what's most important to you. Asking "Does this align with my values?" before each purchase can curb impulse spending tendencies. Percentage budgets don't encourage the same reflection—reflection that leads to dollars saved.
To start your values-based budget, your first step is to identify your money values. I define "money values" as the core principles and priorities that guide your financial decisions. These values reflect what matters most to you and shape how you prefer to earn, spend, save, and share your money. Unlike generic financial advice, your money values are deeply personal and unique to your life experiences, beliefs, and goals.
Start by listing all the areas where money intersects with your life. Consider:
Career and income
Home and lifestyle
Health and wellness
Relationships and family
Travel and experiences
Entertainment and leisure
Retirement plans
And so on! Then, for each area you've identified, ask yourself deeper questions to uncover what matters most, and how that impacts your money habits:
Examine your emotions. What purchases bring you lasting satisfaction? Which spending decisions do you regret? What financial choices make you feel proud or aligned with your principles?
Consider your patterns. Where do you consistently choose to spend extra? What do you tend to prioritize when money is tight? Which expenses do you never question?
Explore your motivations. Why do certain financial choices feel important to you? What experiences from your past influence your money decisions? How do your spending habits reflect your hopes for the future?
From your answers, look for themes and try to name your money values. Think things like "experiences and adventure," "security and stability," or "comfort and quality."
Once you've identified your money values, use them to guide your budget:
Evaluate current spending. Review your recent expenses and assess how well they align with your identified values. Look for disconnects between what you say matters and where your money actually goes.
Set value-aligned goals. Create financial goals that directly support your core values. For example, if adventure is a key value, you might set specific savings targets for travel or new experiences.
Make intentional trade-offs. When faced with financial decisions, use your values as a framework. This makes it easier to say no to spending that doesn't align with your priorities and yes to expenses that do.
Regular check-ins. Schedule periodic check-ins to ensure your spending continues to reflect your values. As your life evolves, your values may shift, and your financial choices should adjust accordingly.
Identifying your money values is an ongoing process of self-discovery and refinement. And hey: 'tis the season, right? Remember, there's no universal "right" set of money values—what matters is finding and honoring the values that resonate with your authentic self.
Take time to explore and articulate your money values, then let them guide your budget. When your spending aligns with your values, you're more likely to feel confident in what you do with your money.
