In my early 20s, I had a fresh degree in creative writing and was working 50 to 80 hours a week filling out market research charts and coordinating customer interviews for a pharmaceutical company. I often daydreamed about packing up and jet-setting to faraway lands with my trusty journal in hand. I needed to make a change, but traveling cost money. And like many college graduates, I still had a huge pile of student loan debt. I was living with my mom to save on rent and paying aggressively on my loans each month.
I needed to reevaluate the way I was looking at my situation, my money, and my motivation.
I had to ask myself some difficult questions to get to the root of it all: What did I really want for my life? Did I really want to be working all those hours in a stressful job only to put my earnings toward my loans? Or did I want to experience new places and cultures?
When I asked myself these questions, I realized that being debt-free wasn’t the only thing I wanted. Yes, I wanted it (quite badly), but I also wanted to broaden my horizons and see different parts of the world. When it came to budgeting, I needed to be honest about including this passion in the mix.
When I learned to budget based on my values, it taught me how to make better decisions based on what I truly wanted in life. If you’re feeling like you’re spending money in places that don’t align with who you are, here’s how you can get started with your own reevaluation.
1. Define your values
Start with writing a list that includes the important aspects of your life. I mean all of them. That could look something like this:
- family and relationships
- giving back
- personal growth and learning
Once you have your list of major life areas, answer these questions:
- What does this area of my life mean to me? Write a list of words, ideas, activities that you associate with that area of your life.
- What’s important to me about it?
For me, “health” is a broader term. It encompasses physical health as well as mental, spiritual, and emotional health. That means it includes activities like my creative expression (in my case, my creative writing practice). “Personal growth and learning” includes things like traveling, learning languages, and reading.
Asking yourself “why” makes you reflect on your core beliefs about who you are, what you were taught, and who you want to be. Answering why helps solidify the motivation for valuing what you do. If you find answering difficult, it might be a sign you need to go back and reevaluate what you just wrote as a value.
2. Prioritize your values
Now that you have your values written out, you need to put them in order from most important to the least important. Then, do the same with the sub-categories.
This is not an easy task, especially within the categories themselves. You’ll need to be brutally honest with yourself. Everything might seem important, but be real. Your immediate needs (food, water, shelter) will obviously come first, but what comes after that is up to you.
3. Track your expenses and evaluate them
Keep tabs on your expenses for a week or even a whole month (I use the Spending Tracker app). The longer you track, the more data you collect, and the more accurately you can gauge where your money is going. Once you’ve tracked your expenses, go through the list, and ask yourself:
- How did I feel when I spent the money? Proud? Anxious? Guilty?
- Is this expense truly aligned with my values? Is so, which one?
Consider your cable bill. Do you truly value the extra channels you never watch? Do you dread paying it every month? Why?
Run the expense through the questions above and against your values list. If it’s not a match, it’s time to reconsider where you’re spending your money.
For 24-year-old me, traveling was a priority, which meant creating a separate category in my budget to save for travel and getting my debt down to a manageable amount so that I could pay it off along the way, too.
These days, 30-year-old me doesn’t prioritize travel as much as younger me did. So, I’ve since gone back, reevaluated, reprioritized, and adjusted my budget accordingly.
Some of these decisions will not be easy, but being conscious of not only how you’re spending your money but also why helps keep your personal finances grounded on decisions you can trust. Once you begin to have confidence in how you’re using your money, adulting feels that much easier.