Intentional living is something that has caught on in the past few years. People want to do work that has meaning and live out a purpose. Managing your money can be looked at the same way.
Being intentional with your money not only helps prevent lifestyle inflation, but it is also is a key component of creating a budget that works for you.
Intentional is defined simply as being “done on purpose.” In other words, when you do something intentionally you mean to do it.
We know this terminology all too well with children when trying to teach them the difference between and accident and doing something “on purpose.” However, as we grow into adults there always seems to be a little bit more of a grey area in certain areas of life, finances included.
An Example of Intention
How often do you buy things on impulse or when you didn’t mean to? If you’ve never done that…then teach me your ways!
I think everyone buys on impulse every once in a while. It’s very easy to be tempted and overcome by the amount of deliciousness at the checkout in the grocery store. Even places like Best Buy or Kohl’s that don’t sell groceries have lines filled with items—both food and otherwise— that are just under the threshold where you really don’t have to think long about buying them.
You grab that candy bar, even though you don’t mean to, and it adds up. That is the opposite of intention.
Did you know that the same impulse buying scenario can be intentional as well though?
If you make a conscious choice to set aside a certain amount each month specifically for impulse buys and you don’t go over that amount, then you are managing your money intentionally.
Being intentional is all about making the decisions and sticking to them. You made a choice to set aside money that you can spend impulsively. You made the choice.
There are standard ways to manage your money with intention, such as tracking your spending and budgeting your money. That’s all great advice, but those are really just tools to help you manage your money intentionally.
There are two things you can do before all of that to really get a head start and make it easier to be intentional with your money.
Know Your Values
Do some soul searching to find out exactly what you value. For example, I value giving and generosity as well as families. I intentionally put my money toward a ministry that specializes in ministering to families. I have no issue giving to this ministry because it aligns with my values.
Some of you may value eating clean or sustainably. This usually costs more money than the cheap grocery store items that are filled with chemicals so it’s important to make a conscious decision to put your money toward it.
You may have a passion for caring for the environment and not being overly wasteful. This may prevent you from drinking single-serve pod coffee and instead opt for more expensive fair trade coffee.
No matter what your values are, be confident in them. They are a part of who you are and should be reflected in what you do with your money.
In order to figure out your values, I recommend setting aside time to grab a beer or coffee and just reflect on both what you enjoy and what you care about. I value being able to teach people how to manage their money, but I didn’t develop that passion by being passive about it. It took some work determining what I value.
I have a friend at work who values the environment. He doesn’t drink pod coffee or use any of the disposable plates or cups that are provided for us free of charge. Instead, he uses a mug that won’t generate waste.
How do you think he developed this value? It wasn’t because he didn’t like the taste of the paper cups at work. He made a conscious decision that he wanted to do something to help the environment.
How to Determine What You Value
I can’t decide what you value for you, but I can help you get there. To prepare, grab one of your favorite drinks—coffee, beer, margarita, Dr. Pepper, what have you. Now, try and clear your mind of everything else that is going on around you. Lastly, relax. There are no right or wrong answers when it comes to your values. Just own them.
Think back on your life and identify the following three things:
- When were you most satisfied?
- When were you the happiest?
- What activities make you the proudest?
Identify all of these three areas separately. For me, I’m most satisfied when I have a lot of freedom. I value autonomy so my finances reflect that. Autonomy also makes me happy, but not as much as spending time with my family. I also am really happy going out with my family rather than sitting at home.
Lastly, the things that make me the proudest are when I’ve accomplished something that helps someone. Recently, I had someone contact me about how they paid off $25,000 in debt in 10 months because of advice I had given them. That’s probably the highest compliment I can be given. That’s why I do what I do and have a passion for personal finance.
The way I manage my money aligns with my values so I don’t mind spending and/or saving money in order to allow myself more time to do those things. It’s intentional on my part.
Determine what you value so you can manage your money intentionally around those values.
Know Your Goals
Knowing your values takes care of the present. Knowing your goals will help take care of your future. Your goals should align with your values as well, but you have to know what your goals are in order to manage your money intentionally.
Why are goals so important?
Without a goal, there is no end result. There is no aim. Consider this debt payoff scenario.
You want to pay off your $2,000 credit card balance using a payment of $100 a month. In a normal situation, your would pay $100 a month until you had that $2,000 paid off, and then you would stop paying it.
But what if you didn’t know your balance?
What if your credit card company never gave you the new balance, notified you that your balance was paid off, or changed your bill to show you no longer had any payments to make? You would have no clue when to stop paying your credit card bill. Some of us would stop paying the balance too early and others of us would keep paying $100 after paying it off.
With no goal, there is no way to tell where the end is. Setting a goal gives you something to shoot for.
Another important part of having a goal is that it gives you insight on if you are doing the right things to get there. If you have a clear goal, you can measure the things you’re doing and tell if you’re getting closer or farther from your goal.
In the simplistic situation with a $2,000 credit card balance, you can easily tell that using your credit card when you don’t have the money to cover it will bring you farther from your goal. Without your balance, you might not realize that it’s hurting you.
How to Set Your Goals
Think about what you want to improve in your life. For instance, I want to continue to improve as a writer so I have a goal to write a certain word count a day. This gives me practice writing every single day. In addition, I take online courses to improve as well.
I like to set goals for different timelines in my life. They are:
- Five-year Goal(s)
- Yearly Goal(s)
- Monthly Goal(s)
- Weekly Goal(s)
- Daily Goal(s)
For the most part, I take the approach that Gary W. Keller and Jay Papasan lay out in their best-selling book The One Thing. As the title suggests, they advocate picking your most important goal and going after that with all of your attention. Most studies these days debunk the myth that humans are good at multitasking so it’s important to not put too many goals on your plate.
What seems to work for me is setting more goals the longer the timeframe. For example, I usually set only one goal to achieve in a day or a week—one thing to focus on—but I have a couple of goals for monthly and quite a few five-year goals.
The order I listed them in is no accident as well. Usually, what you determine your five or one-year goal to be will inform your daily, weekly, and monthly goals. Set daily, weekly, and monthly goals that will help you get to your one-year or five-year goals.
This also lines up with what personal finance writer Paula Pant from Afford Anything advocates. She has an incredible post on the power of the one percent margin for improvement on her blog that is a must-read.
Set each goal intentionally!
Manage Your Money to Align With Your Goals and Values
Now that you know what your values and what your goals are, you can really be intentional with your money. This is where all of that other great advice comes into play. Here are some tools and methods you can use to help you manage your money with intention:
- Track your spending (I use YNAB!)
- Budget to align with your values
- Set up automatic savings
- Don’t spend your money on things that won’t bring you value
These are all great methods to help you manage your money with intention.
One More Example of Intention
As I mentioned, one of my values is spending time with my family and being able to go out with my family and do some fun or unique things. At the end of April, we did just that by taking a family trip to the Mall of America in Bloomington, Minnesota.
It was a blast!
My two little girls loved how the mall was so big that it had roller coasters inside. My wife and I really enjoyed all of the delicious food they have there as well. It was fun being able to swim at the hotel while Chicago was being pelted by cold and wet weather, too!
All in all, it was a great trip and well worth the money and time we spent to do it.
This is precisely what I mean about intentionality. It aligned perfectly with my values. The trip helped strengthen my relationship with my kids and with my wife, gave us a chance to get away from home and let us get away from our jobs for an extra day.
Knowing your goals and your values are what really sets apart your finances from someone else’s. You can’t really be intentional with your money if you don’t know those two areas. You can track your spending and budget all you want, but those are really just methods to help you spend intentionally.
Have you spent intentionally like that lately?