Most of us are not limitlessly rich — and even then, we don’t have limitless time. That means we all have to make trade-offs with our spending.
Finding opportunities to spend less in certain areas can free up room in your budget to save for emergencies, pay off debt, invest for retirement, buy a home, donate to great causes, or work toward your other goals.
But that tends to be easier said than done. How do you choose what to cut and what to keep?
Why not spending is so hard sometimes
If money decisions were straightforward and logical, it wouldn’t be so hard to save. We would tell ourselves, “I’m going to cook dinner more often this month,” and we would spend less on delivery. But money decisions don’t actually work like that: Research by behavioral economists shows that emotions and unconscious biases affect our spending in lots of invisible ways.
So if you’ve ever found yourself vowing to save money and then swiping your card anyway, congrats — you’re human. Doubling down and getting stricter with yourself isn’t likely to help, because these kinds of choices aren’t simply logical.
Instead, I recommend a different, more intentional way of looking at spending decisions. It means getting to know your personal values better, then aligning your goals and choices with them so that money-saving tradeoff decisions can feel easier, better, and more meaningful.
Here’s how to approach it.
1. Make a list of your most important values
Your values are the core beliefs that are most important to you — the principles that bring meaning and purpose to your life. Put another way, they’re your highest priorities at the deepest level. You can use them as your true north for what really matters when you’re making tough decisions about how to spend your money.
So the first step is to do some thinking about what your core values even are. Start by making a list of your top five. There are no wrong answers here, and no judgment. Some examples: achievement, adventure, balance, compassion, curiosity, the environment, faith, family, feminism, friendship, growth, happiness, integrity, justice, love, optimism, responsibility, security, service, and success.
Here are some framing devices to help you narrow down your list:
During a time in my life when I was content and / or really felt like myself, [this value] was definitely there.
If I made a decision that required me to stretch out of my comfort zone or have less money, it would be worth it because of [this value].
If my friends and family were to describe what’s truly important to me, I would want [this value] to be in there.
Ellevest members can also download a core values journaling worksheet if you want to dive deeper.
OK. Got your list?
2. Map your values to your money goals
Next up is to figure out how your values play into the things you want to accomplish with your money in the future.
Write down your money goals, both for the short term and the long term. That might include things like building an emergency fund, knocking out your credit card debt, helping other people who are struggling with money, starting a nest egg for retirement, sending a kid to college, buying a house, leaving your day job to be your own boss someday, or supporting your parents’ retirement.
For each goal, write down some ways it might connect with your top values, or what kinds of values-related things you could do more of if you accomplish it. For example, if you value family and you’re struggling to save for emergencies, maybe you frame each deposit into your savings account as a gift to your family’s future financial security. Or if you value feminism and want to invest more for your retirement, maybe set a reminder to donate a little to the causes you’re into each time you bump up the autosave on your 401(k). Your future, everyone’s future.
3. Use your values to make meaningful decisions
Now, you’re ready to start deciding what gets trimmed.
First, look for small wins that don’t “hurt”
The easiest way to start saving money is to cut where it’s (more or less) painless. For example:
Start with the places where you’re spending habitually. Maybe you always go to one grocery store, but there’s a less expensive one nearby you can try out.
Ditch the things you really don’t use. Maybe you’re paying for HBO, but you rarely watch it. Maybe there are things you signed up for and have been paying for monthly and have forgotten about entirely: subscriptions, dues, memberships.
Then look more closely at things that might feel like a sacrifice
Here’s where the decisions might start to feel tough. But think of it like this: You’re not just cutting things out — you’re taking an inventory of how you’re honoring your values. How does your current spending create meaning in your life? Understand that, and you can start finding ways to honor your deepest values even as you change your spending behavior.
Say your core values include family and autonomy, so your goal is to buy a house in your home state … but you need to pay off your high-interest debt first. So maybe you put that house off for a while, but take the initiative to organize a cheap and cheerful family reunion tradition instead.
Or maybe one of your values is cultural exploration and you planned to travel internationally … but you recently had to use up some of your emergency fund. So instead, you decide to press pause on travel while you build it back up. In the meantime, you plan to do some virtual cultural exploration, with the idea that learning about a culture — cooking its food, understanding its history, reading books by its authors — will deepen your travel experience eventually, and is something you can find value in now.
Or maybe one of your values is “healthy lifestyle.” You might decide to cancel your gym membership and start running instead, to honor that value but spend less. On the other hand, maybe another of your values is “me time” — and the gym feels like it’s getting you healthy and giving you personal time. In that case, you might decide to keep it, and choose something else to cut back on.
4. Practice money mindfulness every day
You can also use your core values to make more mindful decisions in daily life. For example, let’s say you want to order a delicious latte from your favorite local coffee shop.
Does the experience of sitting quietly with a warm drink map to a core value of self-care? Does sharing coffee time with a friend relate to your value of creating meaningful ties with people? Does caffeination fuel your value of productivity by giving you energy? By buying instead of making coffee, are you prioritizing a value of taking pleasure in little moments, or in quality experiences? Are you making a decision to support your local community and small businesses … which, because of the pandemic, you value more highly than ever? Or maybe you value self-respect, and you’re deciding to respect your own time. And maybe you’re ready to push back on societal gender norms by buying the f***ing latte.
That might sound like a lot of self-examination for a cup of coffee. But this type of mindfulness will become more natural as you practice it. And you might even find, from time to time, that “no” is as satisfying as “yes.”
Because here’s the thing: Rather than telling yourself what you “can and cannot” spend money on, you’re telling yourself why you’re making certain tradeoffs. And you’ll be making financial tradeoffs all your life — in tough times when you need to make choices to cut back, and in better times when you need to choose between several goals and priorities. When you know exactly why you’re doing something — and can easily relate it back to what really matters to you — then you’re spending intentionally, and even difficult decisions can feel more “right.”
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