“Give me five minutes with a person’s checkbook, and I will tell you where their heart is.” While we might not be writing physical checks, Billy Graham’s words are still true for us: our bank account and credit card statements reveal our priorities. How satisfied are you with where your money is going?
The Real Problem: Lack of Conscious Spending
As a financial advisor, I often see a disconnect between what clients say is most important to them and where their money is actually going. And I have yet to work with someone who hasn’t self-diagnosed this problem closely followed by the phrase, “I just need to stop spending so much money.” But overspending is rarely the problem.
Do you notice yourself saying phrases like, “Swipe away,” and “I just won’t look at my bank account balance”? If so, it’s important to know that the real problem is a lack of conscious spending.
Understand Your Values
The first step to becoming a conscious spender is being honest about what you value without allowing shame to creep in. Any time I catch myself saying, “I should,” I pause and ask myself, “Where is this coming from?” Is this something I’ve chosen as important to me? Or did my culture, religion, or family of origin impress this upon me? These questions can be difficult to ask of ourselves and even more difficult to ask of our partners. But answering them openly and honestly is the key to understanding where our values come from. Understanding where our values come from is the first step in making the conscious decision to adopt them as our own.
Once we’re firmly rooted in our values, we can begin to make a conscious spending plan, AKA a budget. Don’t get me wrong, I love talking numbers, but the word “budget” causes me extreme anxiety. Much like “diet,” the word budget represents a mentality of scarcity and deprivation. For example: I can’t spend money on lattes, because I don’t really need them.
I want to stop using the words, “I can’t,” but rather, “I’m choosing not too, because there’s something else I value more.” I want to approach my finances with an abundance mentality, consciously choosing to spend more on what I love and less on what I don’t.
You don’t need to dread the numbers in your checking account. When we think of bills, we think of things we have to pay for. This feels restrictive instead of like a choice, and regret seeps in when we see the deductions from our checking account each month. When assembling a list of what goes out every month, swap the names of your bills with words or descriptions that better align with your values. If you value creating a welcoming space for friends to gather, instead of writing, “Mortgage,” maybe try, “Gathering Space.” By focusing on our ability to choose and invest in what we value, we’re more likely to spend within our means and less likely to feel deprived.
Align Spending With Values
In economics, the term opportunity cost is used to describe what we give up when we choose one thing over another. For example, when we leave money in our savings account, the opportunity cost is the money we could have made had we invested those dollars instead. (And here ends the economics lesson, because although this was something I voluntarily read about on vacation, I realize this isn’t everyone’s first choice for pleasure reading!)
Sometimes what we give up is intangible, and that’s harder to justify in our minds. When we spend our own time and energy cleaning our homes, what we give up, or our opportunity cost, is spending time with our loved ones. Did you just get permission from a financial advisor to hire someone to clean your home? Yes, yes you did. But given what you bring in as a family, you have a finite amount of money to work with. And this is where spending more on what you love and less on what you don’t comes into play. Maybe getting quality time back with your husband means giving up shopping at Whole Foods and saving your quarters for the Aldi cart. You and your husband should decide as a team what you value most and think creatively about how you can align your spending with your values.
Save For Future Values
Now where does savings fit it? You didn’t think a financial advisor was going to leave out savings, did you? I occasionally get pushback that goes something like this: “I might not live until I’m eighty, so why do I need to save for retirement?” Or, “I would rather make memories today than save money for the future.” It’s important we take time out of our busy schedules to visualize what life looks like 30, 40, 50 years from now. That same desire to live for today is going to be there in retirement, too.
At the end of the day, money is like a current; it flows in, and it flows out. It’s true, money doesn’t buy happiness. But it has the ability to increase the quality of our lives and those of others. We can save for our future values by intentionally living out our current values and applying our dollars accordingly.