Value Based Financial Planning – what is important to you?

When you talk about spending, budgeting, and planning for the future, where does the conversation usually end up?  It goes without saying that it will probably take a different path depending on who it’s with.  This conversation with a friend will probably be more light-hearted than if it’s with a parent or child or your significant other.  As a financial planner I get lumped in to a whole different category, it would seem.  I would have to be blind not to notice the way many people cringe the first time they’re asked about their spending habits.

I’m just going to go out on a limb here and hypothesize that nine times out of ten, people shy away from this topic because they are ashamed of their spending.  This is based on the relaxed happiness I see in response to the same question from those who have made a plan and stuck to it.  It’s very common for people to spend when they know they shouldn’t and on things they don’t even want or need.  Then, in the same manner in which my dog tries to hide from sight after she climbs off the couch at the sound of my entry, we try to conceal, forget or rationalize our spending habits.  “What $5 latte?  I don’t see a $200/month coffee habit…where?”

Instead of simply saying stop, I would like to propose that you start.  In order to get on the right track and stop feeling shame about your spending, begin with a value based approach.  The following instructions assume that you are at least aware of what you spend your money on so I highly recommend you begin tracking that.  Then – Start:

-Prioritizing your life.  Take the dollars and cents out of it for a minute and evaluate what is really important to you.  What makes you happy and what can you do without?  Some of the things you spend money on may even be limiting your potential and taking time and energy away from things you enjoy more!

-Cut out the things you don’t need or want, and spend a little more even (Yes, I said it) on the things that really matter to you.  Chances are, you’ll be able to cut more out than you need to spend on the stuff you love doing, and therein lies savings!

-Having someone keep you accountable for your spending and saving.  Spouses can be good for this, but that arrangement can also turn in to a source of friction.  Your financial consultant or at least a friend who doesn’t share your bad habits could help you realize when things are out of whack.  Your financial planner can also help you find ways to save more on the things you do spend on and keep that savings, which brings me to…

-Finding ways to be frugal so that you don’t feel crunched when you get a chance to enjoy the good stuff.  You’ll finally be able to take that trip you have been planning or buy the fishing rod you have been dreaming about.  You like expensive organic groceries?  Plant a garden.  Immensely enjoy coffee?(guilty here)  Brew your own and take a thermos with you.  Have your Financial Planner give you an insurance review, rates change and there is often a chance to save money in that area.

Some debt “gurus” will tell you that you have to cut out all fun and not spend money on anything.  If times are really tough that may be necessary.  But, before you let yourself get to that point take some time to figure out what is important to you and how you can do more of that, at the expense of those meaningless things dragging you down.

If you need any help or just have a question, I am happy to be a sounding board.