We’ve all heard that “we are what we eat”. Is it equally true that how we choose to spend our money also defines us? Are we what we spend? Do we try hard enough to create a personal budget? And if so, then shouldn’t we make sure that our spending choices align with our personal goals? Are you curious to discover how well or poorly your spending reflects your personal priorities?
For example: Let’s say your personal goals include:
- Create a Personal Budget
- Getting in better shape (and reducing your carbon footprint) by riding your bike to work once a week
- Becoming a better cook by making a gourmet dinner at home once a week
- Spending more time with your teenager
Shouldn’t your budget and spending reflect those goals? Specifically,
- You should be reducing your spending on Gas
- Create a personal budget
- You should be reducing your Restaurant expenses, but possibly increasing your Grocery expenses
- Possibly budgeting for regular, even season tickets to an event your teen would actually attend with you
Here’s a simple exercise you can do to synch up your budget plan with your personal goals:
- Write down your 3-5 most important goals which have some financial implications.
- Track Spending
- Determine the types of spending you typically do under each goal.
Example: your fitness goal might impact your spending on Gas, Auto Maintenance and Sporting Goods.
- Look back and see if your spending in each category has been moving in the right direction since you set that goal. Perhaps back to January 1 when you made those ambitious New Year’s Resolutions?
- If you’re on track, congratulations! If you have some room to improve, consider setting a monthly budget just for those categories. Pick a dollar amount which represents lower spending on the activities you’re trying to reduce (e.g. driving) and higher spending on the things you’re trying to do more of (e.g. tickets to sporting events).
- After setting a budget, keep an eye on how you’re doing against it … and by association … against the personal goal it represents.
Mint Tip: You can use Mint.com’s 18 budget categories as a guide.
Mint Tip: Use “Add a Budget” feature in Mint.com to set up and tweak your monthly spending for each category. You can try out this feature in our Live Demo.
By synching up your priorities and goals with your budget, you may discover that it’s now easier to make smart budgeting decisions. What’s more, you should find it easier to resolve potential conflicts between competing demands for your time and money. If we are (in part) what we spend, perhaps you and your money can get into better shape at the same time!
Sign up for Mint.com today and see how better budgeting can simplify your life.