If you’re like many people, you have a little bit of wiggle room in your budget to account for day-to-day expenses that crop up. That might be taking your college student out to dinner when they come home to visit, or it might be meeting up with an old friend to catch up on life over a cup of coffee. Everyone needs these small allowances in life; they make life enjoyable, and relieve some of the pressure you may feel to pay down debt, build savings, and check all of your other financial “boxes.”
So why is it that, even if you have wiggle room built into your budget, you sometimes feel unsatisfied with your spending habits? Why do we want more, even when we’re able to purchase what we want and need?
Knowing the Difference Between Needs and Wants
To understand our spending, we first need to understand what we’re spending on. All of our expenses fall into two unique categories - needs and wants. Needs may be having a roof over your head, purchasing groceries, utilities and running water, transportation, or clothing.
Wants are a little different. Sometimes our “wants” start to feel like “needs” - and that’s where we run into trouble. As soon as we start to believe that we need an HBO subscription, an expensive vacation, or even a nice dinner out as a reward for meeting a goal at work, we start to crave bigger and better ways of spending our money. We quickly start to feel that our needs aren’t being met, when that isn’t the case at all.
One way to combat this “more is more” mindset is to make two lists - one of all your necessary expenses, and one of all the expenses that fall into the “want” category. Of the expenses that are purely driven by what you want, how many of them are having a positive impact on your life? It’s true that money can’t buy you happiness, but it can be used in a way that fulfills you.
It’s tempting to believe that you’re only ever spending money on the things you truly want and need, but that’s often not true. It was Benjamin Franklin who said that small holes can sink a big ship, and the same is true for your finances. Spending small amounts of money every day on things that don’t add value back to your life, or positively impact you in the long run, can leave you feeling unfulfilled and frustrated by the apparent “lack of money” you have left over to spend on things that you really value.
Of your unnecessary expenses, decide which of them meet one (or more) of the following criteria:
- It adds value to your day.
- It positively impacts the life of those around you.
- It lines up with your values.
When you start spending in a way that aligns with your values, you’ll find that you’re infinitely more fulfilled, and that dreaded feeling of “lack” or “not enough” slowly starts to go away. For example, a vacation with your family is infinitely more expensive than a $5 cup of coffee every day. But would saving that $5 every day for a few months put you on track to go on the family vacation you continually don’t have enough money for? Would you feel happier or more fulfilled going on vacation rather than spending money on coffee each morning?
On a smaller scale, you can look at two comparable expenses - $5 on a daily latte, and $5 every day on a new book to read to your kids before they go to sleep at night. Which of those two expenses is going to leave you happier, have an impact on your loved ones, and add value to your day?
It’s not easy to dig deeper to align your spending with your values, especially when small expenses that don’t add value to your life add up so easily. Working with a financial planner can help. Together, you and your financial planner can work to build a budget and improve your cash flow so there shouldn’t ever be a sense of lack when it comes to your finances. From there, they can help you to explore your values and get in touch with some of your big-picture goals, like spending more time with family, or participating in the hobbies you love.
Once you have a clear picture of what you value and why, it becomes significantly easier to spend accordingly. Want help? Contact us today. We’d love to guide you and your family through a values-based spending plan and put you on the path to feeling fulfilled when it comes to your finances.