For many people, a budget feels like a diet: a list of things that are no longer allowed. No wonder it falls by the wayside after a few weeks. You cut the dinner with friends, but the streaming subscription you hardly use keeps running, simply because you never stop to think about it.
There is another starting point. Instead of asking “where can I cut back?”, you ask “what matters to me, and is that where my money is going?” This is called budgeting from your values. It is not a trick to spend more, but a way of choosing with fewer regrets and more peace of mind.
What are values, exactly?
Values are what give you direction: what you find important in how you live. Think of family, health, freedom, adventure, security, creativity, fairness or making a difference for others. The social psychologist Shalom Schwartz (1992) mapped a set of basic values in research across a large number of countries. He showed that people everywhere recognise similar values, but rank them very differently.
That last point is important. There is no right ranking. For one person a faraway trip is an expression of freedom; for another a healthy savings account is the finest form of security. A budget that suits you reflects your ranking, not that of your neighbour, your parents or an influencer.
In acceptance and commitment therapy (ACT), developed by Steven Hayes and colleagues, values are a core component. They are seen as a compass, not a destination. You don’t “reach” family, but you can act towards it every day in small steps. The same goes for money: every purchase is a small step in a direction.
What research says about money and happiness
Does more income make you happier? Daniel Kahneman and Angus Deaton (2010) found that life satisfaction keeps rising with income, but that day-to-day emotional well-being no longer clearly increased above a certain income. Matthew Killingsworth (2021) later found no such ceiling. In a joint study by Killingsworth, Kahneman and Mellers (2023), they arrived at a more nuanced picture: for most people well-being keeps rising with income, but for the least happy group it levels off. Above all, the debate shows that money helps, but that what you do with it makes a big difference.
On that point the research is clearer. Elizabeth Dunn, Lara Aknin and Michael Norton (2008) showed that spending money on others can make people happier than spending the same amount on themselves. Ashley Whillans and colleagues (2017) found that people who spend money to free up time, for example by outsourcing a tedious chore, report greater satisfaction. Dunn and Norton brought insights like these together in the book Happy Money (2013). The common thread: spending that matches what you find important gives you more than spending out of habit or to keep up.
Jonas and Eline set their spending against their values
Jonas (36) and Eline (34) have two children and both have good jobs, and yet every month they felt their money “evaporated”. They had tried cutting back several times before, each time without lasting results. This time they started differently. They each wrote down their five most important values separately and then compared them. Three matched: time with the family, health and security. Eline also had “nature”, Jonas “friendship”.
Next they took their bank statements from the past month and gave every expense a colour: green if it matched one of their values, orange if it was neutral, red if it actually went against them. Their fixed costs were mostly green or orange. But they found three streaming services, two subscriptions to apps nobody used any more and a hefty sum on meal deliveries on evenings when they were simply tired. That last item didn’t really fit with “health”, nor with their idea of “time with the family”.
They cancelled the unused subscriptions, agreed to cook together on Sundays for a few weekdays, and split the freed-up amount between a savings account for security and a pot for an annual family weekend in the countryside. “We don’t really spend less now,” says Eline. “But we feel much less as if the money is trickling away.”
Budgeting from your values does not mean that fixed costs such as rent, energy or insurance suddenly become optional. That base comes first. Values help mainly with the money left over afterwards, and with choosing between options within your fixed costs. If little or nothing is left after the basics, that is not a personal failure. In that case, talk to a budget coach, an accredited debt adviser or your local council’s social services.
Exercise: your values budget in four steps
- Choose your top three to five values. Take a list of values, tick about ten on instinct and cross them off until three to five remain. The Discover your values tool helps you with this. If you share the budget with your partner, do it together, but each choose separately first.
- Colour a month of spending. Take your bank statements or your banking app and mark every expense green, orange or red, as Jonas and Eline did. Don’t judge too harshly: this is about insight, not guilt.
- Shift, don’t cut blindly. Start with the red expenses and the recurring costs. They often include subscriptions that once seemed a good idea. With the subscription audit you get that overview quickly. Then give the freed-up money a green destination.
- Plan a monthly check-in. Once a month, spend a quarter of an hour looking at your spending and ask yourself two questions: “What am I glad I spent money on? And what not?” Small, but it keeps your budget alive.
Why this gives you peace of mind
A budget that clashes with what you find important takes a lot of willpower and breeds resentment. A budget that starts from your values feels more like a choice than a restriction. That makes it easier to stick to, and it removes a creeping source of stress: the nagging feeling that your money isn’t going to the right things.
Financial self-care here means letting your money show who you want to be. Not perfectly, but a little more each month. Would you like to work on that step by step? The online course The road to financial well-being helps you bring your values, goals and budget into line.