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CashBlog Commandment #4: Prepare a Budget for Value Based Spending

The first time I heard the term value based spending was while reading a post written by Shannon over at The Heavy Purse. Shannon has a heart for teaching financial literacy for the masses. It pains her to see people struggling with money when they don’t have to be, and as such, I grabbed onto her to be a mentor like super glue sticks to everything when we first started our journey to pay off debt.

All my life I’d bought things because they made me feel good. I mistakenly thought that “stuff” was the way to happiness, and I was determined to be “happy.” 

I grew up a poor kid in a lower middle class section of the city. After my parents’ divorce, our financial situation went from “struggling” to “we’re screwed”. For a girl just entering middle school, this is NOT a good place to be. I was teased regularly for my thrift store clothes and canvas sneakers, and I made the mistake of caring about what others thought.

As such, when I got my first job at 15, I was going to “show them all”. Nearly every dime of the $300 a month I made (mind you, this was 30+ years ago – wages weren’t that high but I worked by tail off ???? )went for name brand clothes. I’d head straight from the bank over to the local County Seat store (anyone remember those?) and fill my bag with capri pants, fluffy Madonna-type short skirts and those cute t-shirts that used to hang off one shoulder. It was the 80’s after all, and I was determined to be a material girl.

When the world of grown-upism came, however, and I started to have real-life expenses like rent, gas for the car and a car payment, my frivolous spending ways began to be a burden. I faithfully made my $25 a month minimum payment on my maxed out $300 store credit card, so more people started issuing me credit. I happily accepted their offers and began giving them my business, and my money as I paid them interest every month.

When I started working for a local bank in 1990, I remember they gave us t-shirts to wear on Casual Friday to promote their different credit cards. One t-shirt read “Better living through plastic.” Like many others, I fell hook, line and sinker for this mantra and vowed to have a “better life”, but all I got in return was an increasing debt load.

Then, after our financial epiphany and the realization that we were in way over our heads, I discovered value based spending.

CashBlog Commandment #4: Prepare a budget for value-based spending. As you manage your money towards debt-freedom and/or financial freedom, spend wisely. Differentiate between “wants” and “needs”. Which “wants” can you eliminate? How can you save on some of your “needs”?  What does value-based spending look like for you? REMEMBER, nobody else needs to approve of your spending values. Make a budget so that you know where every dollar is going. Track your spending to keep yourself accountable and so that you know how to tweak your budget.


Value based spending means you spend the majority of your money on what truly means the most to you. How do you determine what value based spending is for your family?

It Starts with Goals

You start by writing down a list of your financial goals, both short-term and long-term goals. Go ahead, get a piece of paper. I’ll wait. Now, write down what your most important financial goals are, and think BIG.

  • Do you really want that shiny new car as a goal, or is what you really want to have the freedom that comes with financial independence?
  • Do you really want that vacation to Bermuda this year, or would you much rather have the peace of mind knowing that you “owe no man” anything?

It’s up to you: the beauty of value based spending is that there’s no wrong answer. But having that list of goals gives you a catalyst from which to make all other spending decisions in a way that best serves what you truly value. For example:

  • When you get a hankering for ordering pizza instead of cooking at home, you can ask yourself: What’s more important to me – the convenience of not having to cook tonight, or being able to put an extra $20 toward my credit card?
  • When you see that shiny new whatever at the local big box store, you can ask yourself: What’s more important to me – to add a twentieth sweater to my closet or to put an extra $30 in my emergency fund?

Having that catalyst to make decisions with will help you to learn to put your money where it will truly serve you best. Knowing that the answers are yours and yours alone will give you the freedom to do with your money what makes you truly happiest.

People often equate the word “budget” with “restriction” or “prison”. But when you prepare your budget in a way that aligns with your value based spending virtues, you give yourself the freedom to start achieving what you truly want out of life, and the freedom to stop pursuing those things that seem like freedom but are in reality the worst form of bondage: the things that hinder you from achieving what you really want.

And that, my friends, is the key to truly better living.

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Erin Thompson

Erin Thompson spent years managing her own blog about budgeting and debt. Because of that, she has great insights not only about managing spending and borrowing but also about running websites profitably. When she's not writing articles for us, she's traveling and looking for new types of wines to try.
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