We all have different values, and these values often reflect in our spending habits. For example, someone who values experiences over possessions might be more likely to spend money on travel, concerts, or dining out. Someone who values health might be more likely to spend money on gym memberships, health supplements or alternative medicine. It might be cars, shoes or coffee. It will be individual to everyone, and when you think about it, you’ll likely know straight away what your “thing” is.
There is no right or wrong way to spend your money, but it is important to be aware of how your spending habits reflect your values. If you are not happy with your current financial situation, it might be helpful to take a closer look at your spending habits and see if they are aligned with your values.
Costs are Going Up
There’s no hiding it. We are all feeling it. The Cost of Living is on the up. It’s been well documented and all of a sudden everyone is an expert on inflation. Except for one of the mainstream red top newspapers which asked when prices were going to come down because inflation was lower than expected. They didn’t understand that falling inflation still means prices are rising, just less quickly.
According to a recent FCA Study – Financial Lives 2022, 54% of UK adults are increasingly anxious or stressed about the current increase in cost of living.
Furthermore, between July 2022 and January 2023, 56% of UK adults had either stopped saving, reduced saving or withdrawn from their savings to meet daily expenses. Around 1 in 8 (13%) or 6.2 million adults cancelled an insurance policy to help them afford the costs.
According to the Office for National Statistics, the average UK household spends £500 per month on non essential expenditure, such as leisure, clothing and gifts.
We are all looking at cost saving measures, and reducing savings is an easy starter because we aren’t giving up our lifestyle. Cancelling insurances is a bit more serious. It could be something you later regret should you actually need to claim on it. Eventually, we may have to look at something which impacts on our lifestyle, and that’s non essential expenditure.
Or, we go the other route, and look at ways to get more money into our pocket. As we all know, this is easier said than done.
The Importance of Saving and Investing
While it’s important to spend money on the things we love, it’s also important to save for our future. Saving and investing can help us to achieve our financial goals, such as buying a house, retiring early, going on that big holiday or sending our children to university.
However, saving and investing can be difficult, especially if we are not motivated by our values. We need to find ways to connect our financial goals with our values.
Align your Values with Your Money
With your financial planning, the only way you’ll care is if it is aimed at achieving what you want. We can create a clever tax efficient financial plan to let you retire at 50 – no problem. But if you turn around and tell me you don’t want to retire, you just want 3 nice holidays a year and to give money to your children, then we’ve wasted everyone’s time. This is why we can’t even begin work until we know about you and what matters most to you. It’s the only way it can work and for you to continue working on it.
It must be meaningful to you.
Our spending habits reflect our values. If we make it meaningful, like saving for your family, then you’ll do it. We need to connect our financial goals with our values. By doing this, we will be more likely to stick to our financial plans and achieve our goals.
Understanding your values is essential to help create a financial plan that is aligned with them.
Speak to us if you want any help.