Does Your Savings Plan Match Your Values?

“You can afford anything, but not everything. What’s it gonna be?”

Paula Pant

This statement really hits home for me for two reasons: 1. It’s SO exciting that we can afford so much of what we want if we educate ourselves and take action. 2. It really makes us focus on what we value.

If you haven’t done this recently (or ever), take a minute and write down what you value the most. It’s probably a pretty short list, so it won’t take long.

The next step is to ask yourself if you’re putting your money where your values are. The truth is that many of us get caught up in our consumer culture and spend money on things that we don’t really value. Things that are high-tech and fancy but that also bog us down with consumer debt. We end up owning so many things and trying to do so much that we are left with not enough time or money to do what we love with who we love. Or we spend so much money in the present that we rob ourselves of a more secure future without even realizing it.

If your list of values includes things like time with your family, more vacations, a secure retirement, and taking care of your health and you want more of those things, the only way to get there is to earn more or save more (or both!). We’ll get into earning more in future posts, so for now let’s think about saving more.

Let’s say you could find an extra $500 a month, or $6,000 a year. What could that money do for you?

  • $6,000 a year invested for 30 years at a 6% return rate would equal $537,271. Your $180,000 investment would likely turn into half a million dollars. (Which could then EARN you $21,000 a year without ever dropping below that $537,000 mark.)
  • $6,000 a year could go towards a down payment on your first house or rental property. 
  • $6,000 a year could pay off debt.
  • $6,000 a year could build your emergency fund and peace of mind that you could make it through an unexpected life event or expense.
  • $6,000 a year might mean you don’t work that summer job and get to spend more time with your family.
  • $6,000 a year might equal a few vacations, depending on where you go and how you maximize travel rewards (details coming in a future post!).
  • $6000 might allow you to take some classes and advance on the salary schedule to increase your income.

Ok, you get the idea. But how on earth can you find an extra $500 a month? (Or $100? Or $50? The important thing is to get started and grow from there!) This is the spot where it gets really personal, because what works for your family might not fly for the next one. This is also the part where it gets really, really exciting because once you start thinking outside the box in pursuit of what matters most in your life–powerful and awesome options present themselves. There are SO many stories out there of people who have gotten out of debt, or retired early, or stayed home with the kiddos, or otherwise “bought their freedom” by drilling down into their spending and bringing their pie-in-the-sky vision to life. For David and I, paying off $110,000 in student loans and buying our home became our mission. Once we aligned ourselves with those values and came up with a budget and savings plan, we built an incredible amount of momentum and became unstoppable. As soon as those loans were gone and our walls had a fresh coat of paint, we shifted our momentum towards our next goal. Here are some of the choices we made in order to make our dreams a reality:

  • We bought a small (805 sq. ft.) home, so we only needed ½ the loan that the bank was willing to give us. It’s in the perfect location for us and we absolutely love it.
  • We only have one vehicle: a used 2006 Tacoma. This is perfect because David gets to walk or bike to work and get some outside time every day before he settles into his office. In his previous job he needed the car so I walked or biked every day.
  • We lived on a budget. With a capital B. I price-compared groceries around town and we spent almost nothing outside of what was absolutely necessary.
  • Our vacations consisted of backpacking in destinations that we could drive to. We will be backpacking regardless of our net worth for as long as we live, so the fact that our favorite hobby is nearly free was a nice bonus. 
  • We have never had cable or TV/internet subscriptions at home.
  • We invested in our Roth IRAs as soon as we learned how, even though our contributions were small.

Once the loans were paid off and we had our home, some of these things changed. I got an iPhone. We went to Belize and snorkeled for 10 days. We started going out to dinner every once in a while. We are currently considering some sort of entertainment upgrade at home. The key is that each step of the way we’ve talked about what we value most and made our choices based on that.

The result is that we enjoy the heck out of all of the rewards and the sacrifices don’t really even feel like sacrifices.

Now, do you have to do these exact things to create a life that’s more focused on what matters most to you? Heavens, no. Your choices will be yours and have to feel right to you. I’m simply saying it’s worth holding the things you’re spending money on up to the light and asking if they are serving what you value most. If they’re not, take a good look and ask yourself if there’s anything you can change. (And keep coming back here–I’m going to dive into detail on so many of these ideas!) If you see the changes as a means to getting more of what you really want, it quickly becomes an exciting and gratifying challenge. The things you reduce or remove will hardly be missed as you serve your greater goals. You can afford anything, but not everything. What’s it gonna be?

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To read more from the amazing Paula Pant, check out her website and blog here. She also has an awesome podcast called Afford Anything, available wherever you listen to podcasts.