Spending Based on Values: The Key to a Happy, Debt-Free Life -

I think it’s safe to say we all want to live a happy and debt-free life. For many people though, this can feel like an impossible dream. People often feel deprived when they are in the middle of paying off a large amount of debt or struggling to build up a savings. And when you feel deprived, it’s hard to be happy.

It doesn’t have to be that way though. No matter what your financial situation is, you can reach your financial goals while living a fulfilling and happy life. The key is spending based on your values. This is often referred to as “values-based spending” or “values-based budgeting”.

Values-based spending is when you align your spending habits with your personal and financial core values. It is a conscious choice to spend your money on the things that truly matter to you while cutting back on spending in other areas.

Using this strategy to make financial decisions reduces the feelings of guilt people often feel when spending money because each expense is related to something that is truly meaningful to them. It also helps people save money because they are no longer making impulse purchases or letting social pressure influence their money decisions.

So how do you implement this into your life? Continue reading and I will take you step by step through the process. You might want to grab a pen and piece of paper.

Young girl sitting on dad's shoulders while smiling and looking at her mom.

Step 1: Identifying Your Personal and Financial Core Values

The first step to start practicing values-based spending is to identify what your personal and financial values are. Think about what brings you joy, fulfillment, and satisfaction and consider what you want your life to stand for. Take a look at the list of values below along with the examples of spending related actions. Write down 3-5 of the top personal and money values that resonate most with you. Rank them from most important to least important.

Personal Core Values

1) Family

Prioritize spending time and resources on family activities and supporting loved ones (saving up for plane tickets to visit out of state relatives, hosting big family parties, contributing to a vacation fund as part of your monthly budget) .

Side note: you might be interested in the article “10 Ways to Vacation With Family While Paying Off Debt“.

2) Health

Living a healthy lifestyle is a priority (paying for a gym membership, buying organic food, spending money on therapy for mental health)

Woman working out in a group exercise class with a smile on her face.

3) Security

Prioritize safety, stability, planning for the future to avoid unnecessary risks (establishing an emergency fund, saving for retirement, paying for life insurance)

4) Freedom & Flexibility

Prioritizing a lifestyle that provides the freedom and flexibility to do the things you want such as being able to drop off/pick up kids from school or waking up without an alarm (aggressively saving and investing to retire early and/or reach financial independence, hiring someone to clean your home so you have time to do something else)

5) Education

Dedicated to learning and personal growth for yourself and family (paying for college classes, buying an online course, opening a 529 plan for your child)

Young women with curly hair sitting in a lecture hall at a university taking notes.

6) Integrity

Making choices that reflect honesty, transparency, and ethical behavior (only buying from fair-trade companies, buying cruelty-free products, supporting small, local business over places like Walmart or Amazon)

7) Environmental Sustainability

Prioritize reducing waste, supporting environmentally-friendly products, and making sustainable lifestyle choices. (shopping second-hand to prevent things from going to the landfill, buying an electric vehicle, paying more for environmentally-friendly products)

Hands holding up cards that say refuse, reduce, reuse, recycle, and repair.

8) Community

Building relationships, finding ways to support the local community, and supporting social causes (donating money to the school athletics program, buying cookies from the Girl Scouts outside of the store, donating to a GoFund Me for a local family who had a house fire.)

9) Adventure & Experiences

Prioritizing experiences, travel, and trying new things over material possessions (going on vacation every year, taking fun classes to learn new skills, going to an amusement park, not keeping up with the latest tech gadgets).

A mom, dad, and child sitting on the side of a mountain overlooking the scenery at sunset.

10) Simplicity

Striving to live a minimalist lifestyle, avoiding clutter, and valuing experiences over things (spending a minimal amount of money on holiday decorations, home decor, new clothing, not buying a fancy, new car every few years)

Side note: You might want to check out the article “15 Amazing Benefits of a Capsule Wardrobe for Moms“.

11) Creativity

Finding joy and fulfillment through artistic expression and creative hobbies (buying supplies you need for a DIY project, investing in quality art supplies, taking guitar lessons)

Guy with a man bun and woman with blond hair each painting on a canvas.

Financial core values

1) Financial Independence

Building enough wealth to be financially self-sufficient and not reliant on external support.

2) Debt Freedom

Aiming to live a life free of debt by avoiding loans or aggressively paying down existing debts (you might be interested in “12 Steps to Make Paying Off Debt Easier”)

Woman holding her arms up in the air while looking at the sky.

3) Saving

Prioritizing saving for future needs, such as emergencies, retirement, or specific financial goals.

4) Investing

Growing wealth through strategic investments in stocks, bonds, real estate, or other assets.

Image of the stock market electronic board.

5) Financial stability

Prioritizing a job that provides consistent paychecks and health insurance

6) Frugality

Finding value in spending less and living within or below one’s means. Being a good steward of one’s resources.

7) Charity

Regularly donating a portion of income or resources to charities or causes that align with personal values.

2 males and 1 female in volunteer shirts handing out small bottles of water.

8) Legacy

Planning for the future by leaving behind a financial legacy for loved ones or charitable organizations. Using your money to improve the world in some way.

9) Experiences Over Things

Spending money on experiences (e.g., travel, events, education) rather than material goods such as the latest tech gadgets.

Smiling woman behind the wheel of what looks like an RV.

10) Ethical Spending

Supporting businesses and practices that align with ethical beliefs, such as fair trade, cruelty-free, or local products.

11) Preparedness

Building emergency funds, having insurance in place, and establishing other safety nets to ensure financial security when unforeseen circumstances arise.

Image of someone's hands only holding paper and a pen trying to hand it to another set of hands.

Step 2: Rank Your Values

After you have chosen your top 3-5 values, rank then in order of most important to least important.

Step 3: Assess Your Current Expenses and Spending Habits

The next step is to assess your current spending habits and patterns. The best way to do this is to look at your bank statements and credit card bills for the past 2-3 months. Categorizing each expense (i.e. groceries, dining out, entertainment, utilities) will give you a good idea of the bigger picture.

Woman sitting at table looking over her finances.

Step 4: Compare Your Spending with Your Values

Identify areas of spending that aren’t in alignment with your values. What are you spending on that doesn’t support your goals or contribute to your happiness?

Step 5: Set Financial Goals Based on Your Values

Determine short-term and long-term goals that support your values. For example, if “adventure and experiences” is one of your core values, a short-term goal could be to budget for a day trip to a new place each month and a long-term goal might be saving for a yearly vacation.

Image of a woman's hands holding a notebook on her knee with a pen in hand.

Step 6: Create a Values-Based Budget

This is a method of budgeting where you allocate your money toward expenses that align with your core values. Focus on making intentional spending decisions that support your values and reduce spending in other areas. For example, if “simplicity” is a core value, decrease what you might be spending on home or holiday decor.

Step 7: Track Your Spending and Adjust as Needed

You can keep track of your finances in a notebook or use a budgeting app such as YNAB (You Need a Budget), Monarch Money, or PocketGuard. Set aside time every week (or month, but a week is ideal) to review your spending. If you are spending too much on expenses that don’t align with your values, reassess and make changes.

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Step 8: Automate What You Can

Setting up automatic transfers to savings or investment accounts will help you keep your spending aligned with your goals.

Step 9: Periodically Reassess Your Values and Goals

Step 9) Periodically reevaluate your values and goals. Your values and goals will shift and evolve over time. Get in the habit of setting aside time every few months to reassess and make adjust your budget if necessary. Remember to stay flexible. This is a key component to successfully maintaining a budget that aligns with your goals and values for the long term as your life changes.

Step 10: Involve Your Family

Let your family or partner know what your values-based budgeting goals are. Encourage family members to participate in spending decisions to foster habits that are congruent with shared values. Remember that a family member may have different values than you so it’s important to respect these differences and allow them to also make money decisions based on what they value most.

A dad, mom, and little girl weearing glasses upside down pressing buttons on a calculator.

Following these steps will help you give you a clear picture and establish a spending plan that supports your goals and deepest values. You will have an easier time saying no to what doesn’t serve you and spending money on what matters most without guilt. It is the key to a successful personal finance journey.