Ms ZYou Bugeting

I don’t really budget in the traditional sense.

What I mean by that is I don’t start each month and make a budget, I don’t create spending categories and then give myself a numerical number as a budget or target for each category.

And also –  I don’t subscribe to the mantra budgets are sexy either.

Instead, I operate flexibly, and budget by values.

Budgets Ms ZiYou Pennies

The personal finance world is full of budgeting advice and a myriad of approaches. I’m not going to tell you what to do, but I will share what works for me. This approach allows me to be both happy and fulfilled, and not spend too much.

Tracking your spending

Despite my dislike of traditional budgets, I am an enthusiastic advocate for tracking your spending. That is knowing where every penny you spend goes and tracking this religiously. I have done this for years, and it’s fun to look at the data occasionally.

There are many ways to do this – from the old-fashioned paper and pen, an app or reconciling receipts at the end of the month. Choose one that works for you and stick to it. Moreover, there is no shame if you initially have a large ‘other’ or cash withdrawals category.

The complexity of Line Level Budgets

Ms ZiYou calculator

Now back to budgets themselves. Line level budgets are where you have your expenses listed into categories and have a number each month that you call your budget or target number. After the month has finished, you then review the month and fill out what you spent in each category, as the actuals. Then you can compare the budget vs actuals for each category.

While line level budgeting can work well for some people, for me it is too time-consuming and too much effort. Moreover, as part of the review process, you have a lot of data points to look at and review. At the end of the day, I’m not that bothered if I spent more on drinks this month and less on travel than I budgeted. That level of detail just does not matter to me at this stage in my life.

The simplicity of High-Level Budgets

As an alternative, I use the high-level budget. I have a number I like to spend each year. Then each month I check my progress on a rolling 12-month basis. If it’s low I’ll not give it a second thought and move on to spending my time on something more fun.

If it’s a bit high I’ll look at my tracked spending and see what I’ve spent. And I’ll then do an internal monologue and check if I value what I have spent the money on. If the spending aligns with my values the overspend does not bother me. But if the overspend is on items I do not value, I make a mental note to spend less on that in future. And that is the extent of my budgeting.


I believe we all have intrinsic and unique personal values and beliefs. Sometimes these are forefront in our mind and we can readily state them. Other times they are more hidden and we need coaching to truly understand them.

My core values

So what are my core values, and their relationship to my money and finance?

  • Enjoy the journey to financial independence
  • Maintain my current high level of happiness and readily spend money on this
  • Spend time with people who energise me
  • Support feminist organisations
  • Train my body for health and to see what athletic performance I am capable of
  • Manage my money responsibly
  • Actively advocate for those who are less fortunate
  • Enjoy the outdoors and see more of it
  • Explore the world and gain more perspective
  • Do no harm in the pursuit of saving money

What are your core values and does your spending align?

Ms ZiYou Values

So how would you describe your values? What truly matters to you – both in a day to day context and in the longer term.

Do you have any idea of what you would put in this list? I bet for most of you it will be radically different from my list.

Next is the interesting part – reviewing your spending alongside your values. If you value socialising with friends, a high eating and drinking out budget aligns perfectly. If you value relaxing at home an expensive house is a good match.

On the other hand, if you don’t value the time spent at home, why do you spend a lot on an expensive house? If you don’t value the benefits from exotic holidays, can you justify spending a lot on them?

Budgeting by Values

My preferred approach to budgeting is to budget by values.

That is aligning your individual spending to your individual values.

And being happy with the number if spending meets your values.

You can be spendy or you can be frugal

If all your values involved spending money, you can be spendy. But if this is a conscious decision to spend money on purchases that truly matter to you – I support you on this. Just because I want to save loads and retire early, it doesn’t mean everyone else automatically wants to do the same.

NB: Obviously it goes without saying that unless under extreme circumstances, you should always spend less than you have coming in.

On the other hand if you are the sort of person who doesn’t value material items or experiences, your values will guide you to a frugal budget. And for people who fall into this category, financial independence or early retirement is likely to be a possibility.

Your budget should change as your life changes

I’m a firm believer that budgets should be flexible. You should feel in control of your budget, and be willing to change it as required. For example, you are going to want to change things if you are expecting a new addition to the family.

Taking that a little further, I’d also advocate changing your budget for other less significant life events. If you find a new hobby that brings you immense happiness, maybe you need to increase your budget.

Likewise, as you find you get less benefit from spendy activities, bringing your budget down can give you more happiness than continuing to spend the money.

Related Posts

Over to you

  • What are your thoughts?
  • How do you budget?
  • Does your budget align with your values?

Thank you for reading – please leave a comment below and join in the conversation. You can also connect on Twitter or contact me privately.

16 comments on “Budgeting by values

  1. A sound approach.

    If you don’t track then you’re flying blind. If you don’t analyse then you naively follow an “ignorance is bliss” philosophy. If you don’t act then you’re behaving like an ostrich, with your head buried firmly in the sand.

    I was intrigued by your “do no harm in the pursuit of saving money” entry. Harm to whom?

    1. That’s a good question in-deed-a-bly.

      I always make sure I do no direct harm; I wouldn’t say buy conflict diamonds and buy things that meant people had to work for free.

  2. If you can’t measure it you can’t manage it.
    But also – spending money on what you want to spend it on and not just on what you spend it on first is very important – and cash flow forecasting is very important to me.
    Finally, the psychology of money and our relationships with it are as fraught as those to do with sex in our heads on a par with Freudian analysis. Understand your mind and you can control your wallet!

  3. “Your budget should change as your life changes”, I agree with this statement 100%. You have to be flexible and adapt to changes in order to remain happy. Priorities change over time.
    I have very similar values (not all:)). My top one has been to spend quality time with family and kids.

  4. Suspect some of this comes down to the psychology of those attracted to and likely to succeed with FIRE. Basically, it seems to attract a lot of analytical data centric personality types.

    I think I’m quite unusual in that I don’t have a budget, track my spending and perhaps only once a month roughly track net worth. Some of this is because for me financial freedom looks like not doing this kind of financial life admin (I really hate admin) and so I’ve set up my life to avoid it. That has primarily involved savings automation of 60-70% of income, and knowing that I’m frugal/earning enough to cover the bills while not having to worry about what’s left over.

  5. I am a very intuitive person. If I think something is worth spending money on, I spend it and don’t look back. That corresponds to your value-thinking I guess. I just never thought of it like that.

    I tend to hold back a lot with material things, less so with non-material things. I want to experience, see, develop, learn.

    I do have a high level budget. And my most important value is that I should never compromise my health (so there should be a roof above my head and food in the fridge)

    What I do is save/invest a fixed amount each month. That’s for my journey to financial independence. The rest I use…

  6. I really like this concept Ms Zi You. I’m not a fan of budgeting, and have never had a budget. I think it is quite a challenging task to start a line by line budget by scratch. But that’s what lots of money advisers recommend Much easier to track your spending and take it from there, or if you really have to start with a budget first, take the average and tailor it to your preferences. I think your budget by values is a better way of doing the later!

    1. Hi YFG – I agree starting a budget from scratch does sound like a lot of work – and I’m sure that’s part of the reason many people fail at it – it’s too complex and time-consuming. I’d second start with tracking your spending, and then add just as much detail as you want personally.

  7. That’s even more high level than our budget. A rolling 12 month budget is pretty good.
    We have a monthly and yearly budget. I’m not too worried about going over the monthly budget, but it gives me an indicator to slow down a bit next month. The yearly budget if more important.
    12 month rolling sounds good too.
    I agree with tracking your expense. That’s much more important.

  8. The last time I tracked my spending line by line and had a strict budget, I was neck deep in credit card debt, so it’s not something I ever wish to do, that is being in debt OR budgeting like that.

    These days, I know (waves hand vaguely) how much I should be spending and if I’m overspending, as this is reflected in my savings rate. The automated savings/investments which come out of my bank account as soon as I’m paid make up a minimum savings rate of 25%. If I totally blew my ‘budget’, that would be all that I save that month. If I’m really careful with my spending, I should be able to save another 25%. However, since I too am enjoying the journey to FI, it’s proving a little tough to get to my targeted 50% savings rate but what’s the point in hitting a target consistently but being miserable?

What do you think?