Do you value coffees, takeaways, beauty, cars, restaurant meals, and trips? Or are you budgeting for your future life while enjoying these treats? In this blog post I look at what I value and how that’s reflected in my budget. I’ve included some step-by-step tips for how to work out your values and work towards your financial goals.
What do you value?
Creating your budget is the first step to designing your lifestyle and future life. If I picked up your bank statements and told you what I thought you valued, would I be right? Would you be gutted with what I thought your values were based on your spending? Is it coffee, takeaways, eating out, clothes, beauty, cars and luxury weekends? Or is it saving, investing, family holidays and trips, paying down debt, schooling or retirement?
Here’s how you work out what you value.
1.Track your spending
To really understand your habits, it is important to track your spending – it might be an absolute shock to see how much and where you spend on things you don’t really value.
Or maybe you’re aware, but you just don’t want to know about it because you don’t want the stress or to be held accountable for your spending.
By recording your spending in the Creating Wealth Workbook you’ll be able to see which areas to cut back on and reshape, telling your money where to go based on what you value in life.
They key is to identify your goals - these are what you value. You then create a simple budget based around your goals. Your budget is the steppingstone to achieve your goals to live a life you love.
My goals for 2020:
-Become consumer debt-free
-Trip to Australia
-Laser eye surgery
-Investment property plan
-Finish home renovations
-Family caravan holiday
1.Work out your values
At the end of the month it’s a good idea to calculate your net worth to see if your wealth increased, and to work out the percentage of your income that was spent on each category.
This helps you to identify what is valued the most, ranked from highest to smallest. The larger the percentage the higher the value.
When reflecting on your spending you can make adjustments at this point and change your budget to mirror your priorities.
-Socialising, holidays – My budget includes weekend activities and when I have a holiday coming up I set up a cash envelope to save. I can’t wait to take the family on our first caravanning holiday this year!
-Sports – Our household is quite big on sport – sports is definitely a priority; BMX, swimming, tennis, dancing and martial arts. We also have a gym membership in our budget.
-Beauty – I love makeup, hair and tan. Because this is an expense only, my husband and I have an allowance each week where we can spend what we like and not be questioned. This is a great idea especially when there are disagreements around spending.
-Wealth– our largest expense is our mortgage and consumer debt. Our aim is to increase our wealth by reducing our debt as quickly as possible and we are attacking this!
-Health – our grocery bill is a little higher than if we just planned to spend enough to feed the family. This is because we allow for more nutritious food so we are living a healthier lifestyle. We make a priority to spend a maximum of $300 per week to feed our family of five. I don’t have a budget for takeaways. This year our aim is to see how long we can go without purchasing takeaways. We don’t need it, and previously we only consumed it out of convenience. Now I just set aside time to ensure I can prep our meals and be organised.
Protection of my family and ownership– I don’t value insurance as such, in fact I don’t like seeing it come out of my account. However, I do make this a priority to ensure my family is protected no matter what happens. With insurance, I know we will still be able to live the lifestyle we do, and still achieve our goals. We have worked so hard to build up our assets and we want to ensure we have them covered should something happen to our house, contents or vehicles. We also ensure our Wills and Power of Attorney are up to date, by diarising this in our calendars
Boom - so there it is. Your budget is a reflection of your values – so what do you value? Have a look at your bank statements and see if you spending reflects these values. If it needs tweaking - go back to setting goals, create your budget around your goals and live the life you designed.
Get in touch with me for one-on-one help. Or to start creating your budget to design your lifestyle and future life, the "My Creating Wealth Workbook" is available to purchase online https://www.creatingwealthnz.co.nz/shop/