This is continued from Values-Based Budgeting: Identifying and Defining Goals and Values…

Start with your values and goals. In a fresh new document, list your three values. Below each value, list 3 potential actionable goals. These can be a mix of things you already do, and things you’d like to do to further your values. Also try to create a mix of money-based goals (such as saving up for a trip) and life-based goals (such as visiting your parents outside of the city once a week—which will require extra gas money).

Now, combine these with your budget. You probably won’t be touching the Income and Fixed Expenses columns unless you get a promotion (congratulations!) or are able to talk the cable guy into a lower rate (good luck!). So for now we are dealing with the Discretionary Income.
A budget of $75 a week for groceries? Well, that’s boring, and doesn’t add anything to your life other than a number. But if you add the value that you want to buy as many locally grown vegetables each week, well, look at that! You’ve just directly added value to your life picture and your budget. Now, you can sew up a cute tote bag in 20 minutes, and enjoy your Saturday mornings at the farmer’s market. You’re killing a few birds with one stone—a fun sewing project, supporting farmers, eating healthy food, and entertainment for a Saturday morning! One of my favorite things to do!

An example of a goal would be, say, for instance, that last winter you really got the doldrums. Just like, really, really, got cabin fever/the blues/the mean reds and/or a stomach flu. All things that made you desperate to escape, but it wasn’t in the cards (and by that I mean, the budget). So start saving! Set a specific, measurable goal: I want to save $800 for a winter vacation next January. That means you have 10 months to save, so you need to shave off (or earn an extra) $80/month to achieve this goal.

Keep in mind that Discretionary Income is for saving and spending, so first things first: Create your savings goals before your spending goals.

Examples of Savings Goals

Emergency Fund: This is the cushion in case you lose your job, get sick, or need to make a major repair to the house immediately. Consider this a necessary savings goal.

• Goal: Funnel a portion of your paycheck here automatically.
• Value: Security

Paying Off Debt: This is technically spending money, but I consider it a savings goal because you aren’t spending the money for anything in the present; you are paying off the past.

• Goal: To pay off debt sooner.
• Value: Independence

Long-Term Savings: Setting goals for long-term savings such as a down payment on a house, a new car, college for your kids, etc.

• Goal: Down payment on a house
• Value: Family, Security, Independence

Short-Term Savings: Saving for things such as a new camera, a vacation to the Bahamas, a big birthday bash.

• Goal: Save for Vacation
• Value: Health, Happiness

Your own specifics will come into play here with actionable, measurable goals.

Examples of Spending Goals

Spending goals are not as easy to categorize, since they will usually involve spending more, spending less, or spending the same amount but juggling it between categories.

For instance: spend less on individual entertainment (use an actionable, measurable goal amount here) and spend more on community (for instance: taking old friends out to dinner once a month; purchasing books for and participating in a monthly book club).

Your value may be thrift, so clipping coupons in an effort to save money at the grocery store might be a great budgeting goal for you. Or perhaps one of your values is supporting local artists, so you decide to spend one evening a month going to the art gallery instead of the movie theatre.

Putting it All Together

Our values can inform our goals and budgets, and our goals and budgets can inform our values. We can tell the “GPS” of our budget that we want to spend less money on gas and ride our bikes more. We can tell it that we decide investing in microfinance is important to us, so we need to increase the payments on our debt so we can pay it off sooner and put that money towards our investment.

These are decisions we can see in our everyday life: every week when we pick up that CSA, or when we decide to take Friday afternoons off from work and use them volunteering at the after-school program. Most commitments and decisions in our lives affect both budget and values. Linking them makes budgeting easier and values and goals more prominent in your life.

Image via Wit + Delight