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Finding ways to maximize what you can do with your income is an important part of money management. While it’s easy to assume that this involves sticking to strict budgets, improving your finances doesn’t necessarily mean you have to stop buying unnecessary things — you just need to make sure you avoid reckless, pointless spending so you have space make purchases that you truly love and care about.
Of course, every purchase doesn’t have to have a purpose, but it’s easy to fall into the trap of making impulse purchases for instant gratification that you soon stop caring about. All that money can really add up and before you know it you won’t have enough money left for the experiences and things you really value.
“Spending based on your values means making decisions that reflect what’s important to you,” says Maia Monell, co-founder and chief growth officer of the Nav.it app. “It means investing in the things that bring you joy, satisfaction, a sense of accomplishment, and purpose.”
Remember that spending money based on your values can look different for everyone. For a person, satisfying shopping can mean they spend on higher quality ingredients because cooking a good meal is their favorite part of their day. For someone else, it might mean paying a premium for sustainable fashion items because they like supporting companies that want to help the environment.
The return on investment of a value-based purchase isn’t always tangible – sometimes it’s more about gaining knowledge, having a stronger sense of community, or using your creativity. It’s important to differentiate between the things you love to buy and the things that just eat up your cash flow.
“Spending money on things you don’t care about can mean missing out on opportunities and experiences to invest in the things you really care about,” explains Monell.
Below, Select shares some of Monell’s top tips to ensure you’re spending your money with your personal values in mind.
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1. Have an idea of what your values are
“The first step is to be clear about what matters most to you,” says Monell. “It can be anything from family to travel to financial security. Once you know your values, you can make decisions that reflect them.”
For example, if your most enjoyable time is being with family, the amount you spend on family activities may be more than the amount you spend on other areas such as shopping or self-sufficiency. And when health and fitness are the most important parts of your everyday life, it makes sense to spend more money on higher-quality grocery stores or sporting expenses like a gym membership or personal training.
Depending on what phase of life you are in, your values may also change. Personally, when I was living at home with my parents, spending money on travel and dining out with friends was my favorite thing to do. Now that I When I have my own apartment, the purchases that make me happiest usually revolve around home decor and anything that aims to make my space feel more comfortable.
It makes sense when you consider that I spend most of my day in my apartment and therefore want to improve the place where I work, study, eat and relax – it’s important to me that the things I buy , improve my experience at home.
When you’re trying to get clear about your values, a good place to start is to think about the types of experiences you love, the types of little pleasures you enjoy, and how you try to improve your daily life.
2. Track your expenses
It can also be helpful to track your progress and make sure you’re actually sticking to the ground rules you’ve set for yourself. The best way to do that is Create a budget or spending plan so you know exactly where your money is going.
“Once you have a budget, start tracking your actual spending to see how well you’re sticking to it,” says Monell. “This can be done via a simple spreadsheet or even a notebook. Keep track of your progress so you can make changes if needed.”
Keeping track also makes it easier to determine if you’re still overspending in areas that don’t make sense to you. That way, you can take steps to reduce or cut that spending altogether.
Select ranked the Mint app as the best free budgeting app because it easily connects to your bank accounts and credit cards and automatically categorizes your transactions for you, although users can also change these categories manually if needed. YNAB (You Need A Budget) is another solid option for those who want to make sure they’re giving every single dollar a job so you can make sure you’re getting the most of every paycheck.
mint
Information about Mint was collected independently by Select and was not verified or provided by Mint prior to publication.
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Costs
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Outstanding features
Shows income, expenses, savings goals, credit score, investments, net worth
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Categorizes your expenses
Yes, but users can make changes
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Links to Accounts
Yes, bank and credit cards
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Availability
Available on both the App Store (for iOS) and Google Play (for Android)
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security features
Verisign scanning, multi-factor authentication, and Touch ID mobile access
You need a budget (YNAB)
Information about You Need a Budget (YNAB) was collected independently by CNBC and was not verified or provided by YNAB prior to publication.
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Costs
34-day free trial, then $84 per year or $11.99 per month (students who provide proof of enrollment get 12 months free)
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Outstanding features
Instead of using traditional budgeting buckets, users allocate every dollar they earn to something (known as the “zero-based budgeting system,” where no dollar is offset). Every dollar is assigned a “job”, be it for bills, savings, investments, etc.
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Categorizes your expenses
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Links to Accounts
Yes, bank and credit cards
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Availability
Available on both the App Store (for iOS) and Google Play (for Android)
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security features
Encrypted data, accredited data centers, third party audits and more
3. Allow yourself to be flexible
Whenever you make changes to the way you manage your money, remember to give yourself some grace, as making lasting changes takes a lot of patience and practicality. There may be times when you are tempted to revert to previous spending habits, or you may find yourself in certain social situations where asserting yourself is easier said than done.
“Remember that your spending should match your values, but that doesn’t mean they have to be perfect,” says Monell. “If you make a purchase that doesn’t quite fit your budget, don’t worry about it. Just try to think about why you made that decision and if and how you can improve next time. Allow yourself to be imperfect and praise yourself for striving for improvement.”
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Editorial note: Any opinion, analysis, review, or recommendation expressed in this article is solely that of Select’s editorial team and has not been reviewed, approved, or otherwise endorsed by any third party.
