Why Value-Based Spending Can Make You Happy
Today I was going to write about lots of ways to start saving money and how even the smallest amount saved in your monthly budget can add up to be a whole lot saved over the course of a year. While that’s still 100% true, I suddenly realized that this type of content can be found on lots of other blogs and that’s not necessarily why you are here on Debt Roundup.
More than likely, you read Debt Roundup because you are striving to get out of debt. Getting out of debt is hard. Giving up things and finding new ways to cut your monthly expenses is hard. It’s hard to cut your lifestyle when you’ve grown accustomed to a certain standard of living. Trust me – I’m going through these same things right now.
A Changing Mindset
I set a goal to be free from my credit card debt this year. I know I can make it happen, but it’s not because I found ways to save $2 here and $5 there on my monthly budget.
As I said, $2 and $5 can add up to a large sum of money at the end of the year, but the difference you feel in your lifestyle is something you’ll likely have to contend with every month.
For example, I currently subscribe to both Netflix and Hulu in order to have access to all of the TV shows I want to watch on a regular basis. When I was looking at my budget the other day I was tempted to cancel one or the other in order to save more money. By cancelling one of those services I’d be saving approximately $8 each month. At the end of the year that would be $96.
$96 is not something to scoff at when you have credit card debt. Credit card interest rates are extremely high and every extra dollar you throw toward your debt to get it paid off sooner is a big financial win since you’ll be getting away from paying those high interest rates. However, I decided this was not something I was willing to give up in my budget.
There are very few things I pay for each month that are not a “necessity”. I don’t pay for a gym membership because I work out at home. I don’t pay for going to the movies. I don’t go out the bar every weekend, and I eat out a lot less than I used to. I’ve also found lots of ways to save on groceries so I’m only spending around $100-120/month.
Netflix and Hulu are basically the only things I do to “treat” myself with unnecessary spending. The $96/year that I’d save by cancelling one of them is not worth the deflation to my lifestyle that I’d feel everyday when I want to watch TV while working out at home.
In these instances, you have to decide what’s worth spending money on and what isn’t. To me getting out of debt isn’t about cutting every single thing possible from your budget. Instead it’s about only spending money on the things you value and use day in and day out.
This value-based spending is also something that is a lot more sustainable than living with a bare-bones budget. Even after your debt is paid off you’ll likely have financial goals to “catch up” on because of sacrifices you made while paying off debt. Living with a value-based budget is something that can easily be done for the rest of your life, while a bare bones budget is usually something you put up with temporarily in order to put more money toward getting out of debt.
With a value-based spending plan, you are free to determine what you are, and aren’t, willing to spend money on. In my case, I decided I value both my Netflix and Hulu subscriptions. Therefore, I will continue paying for both of them in my monthly budget.
I’ve still made sacrifices in the name of paying off debt, and you’ll have to too, but that doesn’t mean you have to cut every single “extra” expense in your monthly budget. Instead you have to decide what you value, and what you don’t, so you can build your budget based off of that.