This is continued from Values-Based Budgeting: Budgeting Basics…

You should have a pretty good idea of what you have spent for the past month. Don’t stress yet!

Now that we have the numbers, this is where we going gets a little bit tougher. Take a critical look at them. Do you notice that you spend a lot of money by not returning your Redbox movies on time? Or by paying for magazine subscriptions you never read? Library fines? ATM fees because you forget to go to the bank during the week? Make a list and then prioritize eliminating all of these wasted expenses. Do any of the numbers seem high to you? Try to whittle them down.

There are a lot of good tools online to help you with this. I especially love LearnVest’s online Money Center and Financial Bootcamps (these are amazing and free). You can also try Mint. Scour Crown Financial Ministries website (and books!) for some great strategies. Several of these connect with your phone so you can always keep an eye on your finances to decide if you really need a leopard print trench coat or not.

Now let’s get down to the heart of the issue. Why Budget?
A GPS is useless if it only knows where it is, and does not include maps and directions, just as a budget with only numbers is useless. When you combine a budget with your goals and values, you are telling the GPS where to go. You are punching in an address, you can add “Via Points,” you can change the setting from “Fastest Route” to “Most Direct Route” or you can avoid toll roads. In budget terms, you can save for college, or a trip. You can divert more money to your 401k right now or you might choose to invest some of your money. Now is the time to tell the GPS where to go…that is, to tailor the budget to your goals and values.

What are Values, Exactly?
Values are foundational principles that guide our lives and decision-making process. They can be things such as: Health, Happiness, Wealth, Thrift, Relationships, Love, Giving, etc. Values can change: when you’re young, you might value happiness and wealth (to pay off student loans!). As you grow and have a family, you may value health and thrift. It may be difficult at first to pinpoint your values, so take a look at your life as a whole and where you invest your time. Do you spend most of your time at work? You might highly value productivity, duty, or success. Do you spend a lot of time with friends? You might value community and relationships. There is no “right” amount of values to invest yourself in, but three is generally a good starting point.

What are Goals, Exactly?
Goals are actionable, measurable items that fit under your values; they are ways of manifesting your values in your daily life. A good goal should be actionable (one that has steps you can take to complete it), measurable (it has an end result that can tell you whether you completed it or not) and time-sensitive (based on a weekly, monthly, quarterly, or yearly result). For instance, if your value is community, volunteering at the soup kitchen one time a week is a good goal. There are steps you can take towards volunteering (find a local soup kitchen; contact them to set up a volunteer appointment, show up at the appointment and serve); and it is measurable (at the end of the month, did you go to the soup kitchen once a week?).

Stay tuned for Values-Based Budgeting: Combining Values, Goals, and A Budget…

Image via J.Crew and Cappuccinos