Value-Based budgeting: Enjoy What You Love While Following A Budget

Sticking to a budget is boring and value-based budgeting can be a great solution for this. So, let’s learn how to enjoy budgeting from now on.

What is value-based budgeting?

Value-based budgeting, as the name implies, is a budgeting method that’s based on what you value most in your life.

We have different values and priorities in life. So sometimes trying to use some popular budgeting methods like the 50/30/20 budget or The 60% solution won’t work for you.

Maybe what you value most is retiring early, paying off your debts, or traveling and enjoying the moment. Value-based budgeting gives you the chance to enjoy and prioritize what you value in life.

Who is this for?

Value-based budgeting works for people who are good with money and have a good grasp of their financials.

If you’re not good with money value-based budgeting is a bad idea. Because it requires you to have the discipline to enjoy what you like while paying for your necessities.

How to define your values?

If you want to use the value-based budgeting method, first you need to define your values. So sit down and write what you value most in life.

You can write what you enjoy in life or something you want to achieve. Think about the things you would regret not doing when you grow older.

Now, don’t write a lot of things. Choose one or two things that you value most in your life.

Values differ from person to person. They can be:

Eating out
Traveling
Working out
Financial freedom
Paying debts
Buying gadgets

So, be honest with yourself and figure out what you want to prioritize in your life.

How to start a value-based budget?

Now that you know what you value most in life you’ll need to figure out how much it’ll cost you and how can you fit that with your current expenses.

If you’re just starting this method I advise you to put 20% of your after-tax income towards your values. And spend the remaining 80% on the rest of your expenses.

Don’t forget to include everything in the remaining 80%; Things like your rent or mortgage, debts like a car loan or a student loan, different bills, necessities, and savings and investments.

As the months pass you’ll figure out exactly how much money you need to allocate towards your values.

Now, in some cases, you may find it very hard to spend money on what you value most and pay all of your bills at the same time. In this case, you should consider cutting back on some of your expenses. Consider saving money in other aspects of your life in order to do what you enjoy.

And if you think that you can’t save more money you should visit this Personal Finance page where you’ll find multiple posts about saving money. and believe you’ll find some new ways to save money.

If you can’t save more money consider making more money. Go and get a side hustle.

The advantages

Life without regrets

The biggest advantage to this budgeting method is that you’ll do what you enjoy most in your life. You’ll live a life without regrets.

Instead of focusing on standard budgeting methods, you’ll be using a method that suits your personal needs.

Higher chances of sticking to your budget

Most of the popular budgeting methods don’t prioritize your values. That’s why they feel strict and boring. This makes them harder to apply.

On the other hand, because this method is based on what you enjoy in life you won’t be tempted to break it.

The disadvantages

Not for everyone

If you’re not good with money a value-based budget will ruin your life. This is because you’ll be spending money on what you like and forgetting about your other expenses.

This method requires a certain level of self-control. You need to spend money on what you love and at the same time pay your bills.

Your values

Choosing what you value most can be tricky. Some people will have a lot of things to value in their life. They think that they want to prioritize traveling, paying off debts, buying the newest gadgets, etc. And this way they would be lost.

Or in some cases what you value now won’t be the same thing 5 years from now. That’s why it’s important to sit down and figure this out.

Conclusion

Value-based budgeting is a budget that’s based on what you value most in life. It’s a great option for someone who is good with money and has a good grasp of his financials.

You need to figure out what you value most in life and how to fit it within your existing expenses. Consider saving money or making more money to achieve this.

Don’t choose a lot of values. Be aware of how much money you’re spending.

Thanks for your time

This was our approach to value-based budgeting. I hope you liked it and if you did then I recommend you to join my newsletter I post about money management, how to make money online, and how to improve your productivity and mindset.

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