Spend on What You Value

Is a luxury car the most important thing in the world to you? Then go spend a ton of money on it - said the financial planner!
Spend on What You Value

At the tail end of 2017, I signed up for my first only Brazilian jiu-jitsu tournament. In an effort to be competitive, I set a goal: lose 10 lbs. (This is because you compete by weight class.) Losing 10 lbs meant a strict diet of meat and vegetables.

Now, as ridiculous as a strict regimen of leafy greens and protein is, it’s hard to argue with the results: I lost more weight than necessary.  My lackluster jiu-jitsu skills aside (I lost in the first round), I did learn something valuable from the experience:

Carbohydrates are the devil.

By cutting carbohydrates out of my diet, I lost a good amount of weight. Happy with the results of the diet, I’ve stuck with the regimen (at least a little bit). With the knowledge that carbohydrates were the thing that had me gain weight, I decided to be very thoughtful about eating carbohydrates.  This meant being selective about the carbohydrates that I eat.

In the end, I decided that it was the boring carbohydrates that got cut from my diet, like rice, bread, pasta and potatoes. Since I have a sweet tooth, the carbohydrates I really enjoy (and made the cut) are sweets like cookies, ice cream, and pie.

Now, when I do make the decision to eat carbohydrates, I’m very thoughtful about it. I won’t eat just anything. I’ll only eat the things that bring me joy. This because I know eating carbohydrates has a consequence for me: weight gain.

I invite you to consider being similarly thoughtful about your spending. That is, it’s okay to spend money. It’s especially okay to spend money on the things that you truly enjoy and value. But, it’s important to be very thoughtful about what those things are for you. Otherwise, you’ll end up spending too much money to too many things — and you’ll likely spend on things that you don’t get a lot of value from.

Do You Wastefully Spend Money on Things You Don’t Really Care About?

In a previous post, I talked about how tracking your expenses is a critical step in creating an awesome life. This is because when you track your spending, you know where your money is going. (Crazy, right?) Tracking your spending will answer the question:

Does my spending line up with my values?

Or think of it another way: When I think about spending my limited and hard-earned money, I ask myself:

Is spending this money going to make my life awesome?

If the answer isn’t, “Hell yes!”, I pass on the expense.

What Do You Value?

Value is a relative word. What’s valuable to one person may not be valuable to another. But for the most part, there are a few things that fall into the valuable category:

  • Shelter
  • Food
  • Clothing
  • Transportation

You don’t need me to tell you that having all your basic needs met is extremely valuable. While we — or most people in first-world countries — may take these things for granted, food and shelter are critically important. Not having to worry about food, clothing, shelter, and transportation is a pretty fantastic position to be in.

What’s Valuable for Us?

After your basic needs are met, the question of what meets the definition of value gets personal. Using myself as an example, I consider travel to be very valuable. I truly enjoy going to new places, seeing new things, and – of course – eating new and different foods.

I also put ju-jitsu into the “valuable” category. I really enjoy ju-jitsu. For me, it’s a lot of fun. I get exercise. And I get to challenge myself. So, despite the high price tag of membership, I choose to spend the money.

For my wife, what’s valuable to her is seeing her favorite band, or going to art festivals. Those things are important to her. That’s where she decides to spend her money.

What’s Not Valuable For Us?

What’s particularly not valuable for us is a constantly rotating wardrobe of new and expensive clothes. When it comes to shopping, we opt for the clearance rack, thrift stores or clothing swaps.

We also don’t think it’s particularly valuable to have someone prepare an (overpriced) meal for us. (You may call this dining out.) We enjoy cooking at home. And when you’ve been cooking yourself for a decade and change, your cooking game becomes strong. The result is that in the rare instance that we do eat out, we are often disappointed — because we can do it better ourselves!

A TV package with lots of movie channels and access to every sports game also isn’t something we value. It isn’t worth it to us. Netflix works just fine. There’s also Hulu or Amazon Prime. We get a lot of sports with an over-the-air antenna — which has recurring subscription cost of zero.

Of course, there are also luxury automobiles – which we don’t value. As such, I drive an 11-year-old car (that gets me where I need to go). That’s all I need! And I don’t plan on getting a new car anytime soon.

For us, the expenses above just don’t make sense. We don’t really think we’re getting a good bang for our buck when we put money into these sorts of things.

What’s Valuable to You?

Of course, what’s valuable for me isn’t necessarily what’s valuable for you.

Recently, we met with a prospective client. The wife of the couple mentioned more than once that makeup and fancy clothes were not her thing. For her, having a nice home was most important.

A while back, we were working with an engineer. He shared that he truly valued freedom and flexibility. His goal was becoming a digital nomad – where we could travel the world and work from anywhere. In the course of working with him, he decided that eating out wasn’t valuable to him – and cut it from his budget.

You Can Afford Anything

The point is to selectively spend money on those things that you find to be particularly valuable. This is because your money is limited. Author Paula Pant says it best:

You can afford anything — just not everything.

So, find anything in the world that is most valuable to you, and then focus your resources (i.e., your money) on that thing. If you do that, you’ll likely have that one thing.

This is why tracking your spending is so important. When you track your spending, you’ll find that you are spending on stuff that you don’t think is very valuable. And with that knowledge, you can reroute your dollars from what matters less to you to what matters most to you.

That’s the secret to enjoying your life now without endangering the things you’ll need later — like a stress-free retirement. Spend on what you value now — and no more — to make your future worry-free.