What is Value-based Spending?

Before looking at value-based spending, we first have to be clear as to what a value is:
A “value” is something that makes life meaningful; something we believe in and which we consider important. A value comes with principles, and the two together guide the way we conduct ourselves in the world.
For example, above everything else Karen values her family; her family is central to everything she does and always comes first. Karen believes nothing is more important, nor can give her a greater sense of joy and fulfillment, than her immediate and extended family members. Within that value – “family” – is a whole host of principles: trust, loyalty, respect, responsibility, reliability, compassion, charity, etc. She believes her values and principles are the right way to be living in the world, and she works hard at applying her values in everything she does.

So what do you most value; that makes being alive worthwhile for you? Think very deeply and honestly about your answer. Being clear about what you most value will help you focus your energies and resources to achieve financial wellness.

Ø My #1 Value is:__________________________________________

Now select five principles (codes of behaviour) that you value most.

Most people place friends and family (relationships) at the top of their value list. This is consistent with recent “happiness” research: People value relationships more than anything else, and those relationships are the main source of happiness for them. According to the research, you would need $100,000 at any given time to get the same level of happiness as you do from relationships. Life is very expensive without family and friends!

Does Your Spending Reflect Your Values and Principles?

When you set your goals for next year keep this in mind.

Five Weeks Later

 

It has been five weeks since I talked about the latte factor.  Based on the October …… blog that means you could have paid down your credit card/loan or saved a total of $230.00.  Does that feel good?  Doing the same thing consistently for 30 times creates a habit, and you have now reached that mark.  Keep up the good work!  Some of you may not have done all 5 weeks, but whatever you did is more than you were doing before. The idea is to spend less on the small stuff and save or pay down credit with what you are saving.  The reason I bring this up now is that we are entering into a time of spending for many of us in North America.

Christmas, next to vacation, can be very expensive, so it’s important to set a budget.  If you just spend there will be more stress in January along with the cold weather and this can be a real downer.  Then, of course, you need to get away to the sun to lift your sprits and so the vicious circle goes. Let’s try to slow down the cycle here. If you do not celebrate Christmas, there may be another holiday that you celebrate that needs this kind of thought and preparation.

Christmas is a celebration you want to start planning for in January. I will blog on that in January.  As it is now just around the corner, we can set out a spending plan and stick to it.  I did my budget for the holiday season last week. I set a dollar limit on the following items: food, liquor, gifts and “just in case”. See, I even plan for the surprises. You may have other categories, but the idea is to keep track and stay mindful of what you spend. This will reduce the headache in January.

The dollar amount you spend is dependent on your financial situation, how big the family is and if you are hosting the family dinner. Try to be realistic. If the kids had a big Christmas last year and the financial situation has changed, it is OK to do less. Try to remember the gifts you got when you were 5, 6, 7 and so on. I don’t remember many of the gifts, but I do remember the food, the games, and the adults singing Christmas carols. Oh yes, and I remember doing all those dishes; that comes with a big family.  It is the celebrating and the family, biological or not, that counts. So if the finances are tight, focus on what will produce the best memories.

Some inexpensive or free things to do:

1. ice skating on the pond or lake
2. carolling in the neighbourhood
3. tobogganing
4. swimming at the local pool
5. building a snow man
6. having a snowball fight
7. playing a board game

Plan to have fun and stay in budget.

Fix the Cause

How is that "reduced spending on the small things" going? For those of  you that are having a hard time I hope the next story will be a motivator. Rethink the reduced spending amount on the small stuff . Don’t for get to pay down the dept with the extra cash.

I got a phone call from my friend, Karen, the other day.  She told me that a mutual friend, Brenda, had just been diagnosed with cancer. Brenda had suffered several years of a restricted existence due to emphysema. She was a smoker, despite a family history of both diseases. Karen said she just could not understand why a person would do something she knew could cost her quality of life and life itself.

While not as extreme, we can consider our spending behaviours as costing us more than our paycheques: our health and well-being for one. Ask most women how they feel when they think about their present and future financial situation and you’ll hear words like “anxious”, “depressed”, “frustrated”, “distressed”, “overwhelms,” even “scared”. These are not descriptions of mental and emotional well-being. Canadian women cite finances as the number one cause of negative stress in their lives. Fifty-two per cent of us say that stress impacts negatively on our health - and with stress comes depression. At least one in ten of us will be diagnosed with depression at some point in our lives.

It’s not just our mental and emotional health that’s affected by financially-related stress, the stress can actually cause us an early death. A recent study has shown that women exposed to high levels of financial and emotional stress are more likely to die sooner than those who aren’t. Furthermore, women are more prone to stress than men, signifying that women are susceptible to diseases like cancer and heart disease.

And how do we address those stress-related health problems? Instead of dealing with the causes, our finances, we deal with the symptoms, and dealing with the symptoms all too often cost us more money, and so the vicious circle continues! Gym passes, the gym gear, spa treatments, dietary supplements and foods, exotic “cure all” potions, yoga classes, meditation and relaxation courses, alcohol, prescription and non-prescription drugs, “getaway” trips, socializing, retail therapy – the list goes on – may help you feel momentarily good, but your financial situation, the cause of your stress, hasn’t changed.

Are you an Addict ?

Here are five ways to tell whether you are addicted to shopping:

1. You get very excited by the prospect of a trip to the shops. We're not just talking about it being a nice treat. If it is more of a necessity that could not get through the week without then you could be hooked. Scientists have found that the euphoria experienced by addicted shoppers is similar to the highs and brain chemistry caused by falling in love. You literally get passionate about the high street.

2. Your mood swings are frequent. You may be animated and over-excited in a shop, even engaging shop assistants in conversation as you pursue purchases. But prepare for the inevitable crash of emotions as the money is spent and the glow fades and you end up gloomy and sullen.

3. You look on social events such as weddings and parties not as a chance for fun but an excuse to shop.

4. Your cupboards are full of new clothes, shoes, jewelry and make-up, either unworn with labels still attached or worn once and never touched again. You don't actually care what you buy so long as you are buying.

5. You're in debt because your income cannot support your habit. 

Think about this while you work at keeping the small stuff spending under control. 

 

So , how did it go?

So how did that go, any new thoughts or realizations? I am sure some of you were surprised at how much or how little you spent on the small stuff. How about your state of mind, were you able to separate the state of mind about money from the actual money? Do you think you could be happy even if the debt is still there?

Now I am no psychologist but I know that how we feel about things has more to do with what we think about them than any thing else. As an example, which I think many of you can relate to, you get a rip in a brand new pair of hose (they were expensive too) and it up sets you because it is money wasted. You will be late for the meeting because you have to buy a new pair on the way.  Now you can choose to dwell on that and tell your story all day or decide to “be prepared “. Start to store an extra pair in your desk at work and you may want to ask some one to smooth off the corner of the desk where you got the snag. Then get on with it and enjoy the rest of the day. Do you see the difference, one person just pouts and does nothing to fix the situation and the next solves the problem and enjoys the rest of the day?  Not all issues are this simple but they work on the same principle. So what will be you attitude about the money in your life? Fix the situation you are in or just pout about it?

The attitude is up to you but I can give you some tip on how to help pay down the debt or save for that rainy day. That is where this “latte factor “will help to free up some cash. Now if you are not spending any thing on the small stuff I say let go and live a little, if the budget allows some freedom.  If not , water and air are basically free.

Example

Please work your own out in the same style. Or just use the total amount for the week

Item	@	#	Total
Coffee/Tea	$3	6	$18
Lunch out	$10	3	$30
Friday Drinks	$7	2	$14
Saturday Brunch	$12	1	$12
Total			$74

I don’t know about you but $74 dollars is more money than I want to spend on the small stuff each week. You may think this is high but if you were to track it for a year this is not all that far out as Christmas lunches, birthday event etc… etc... etc… all add up. 

Look at this as a yearly value.  $74 X 50 weeks (2 weeks vacation) = $3700. Now I don’t want you to stop having fun but pick a loan / card and pay a little extra each week.

Here are some changes you can make and still not feel deprived.

1. Buy a coffee press and good coffee or tea and make your own. The cost is about $6 per week  for a saving of $12
2. Go out for lunch 1 day a week for $12 and save $18
3.  Saturday Brunch only on payday Saturday. $6 savings week if you get paid ever 2 weeks
4. Drinks only now and then, say one time a month. Save $10 a week.

Still having fun and enjoying some of the little pleasure but saving at the same time. The amount you will save every week will be $46 dollars and leaves you $24 to have for the small stuff.

Now pick the loan or credit card with the highest rate of interest and pay this $46 each week. Do each it week or all of it on pay day. Don’t wait to the end of the month the money will not be there.

PS some thing does not become a habit until you have done it thirty times. Hard work but the pay off is great. 
comments welcome

Poverty - Stricken

Eighty-three per cent of the poverty-stricken over the age of 65 are women. So, yes, the question is, “How and why do so many Canadian women end up like this?”

I asked myself “How can I help other women either recover from or avoid the experience of the feeling penniless?” After many discussions with friends, and after much research, I have come up with an approach that I think will help women, and their family, better cope with the stress of money and emotions. However, it will be work.

In the course of developing Women’s Wealthness services, I have heard many stories from women who have experienced or fear experiencing the Dumpster Lifestyle. 

One of the reasons many women tend to have an uneasy relationship with money is that we confuse money with other things. That is, for many of us, money represents psychological and emotional wants.

Take a look at the list of emotional wants below and check the ones that resonate most with you – it may just be one, but possibly all:

• Happiness
• Security
• Freedom/Independence
• Love
• Power
• Success

Understanding that states-of-being are not money and that they need to be considered as completely separate things is the first step towards your achieving financial wellness. As women, we tend to think that we can only achieve or experience those states-of- being  if other things are in place; that is, I can’t be happy, feel secure, love, independent, power or freedom if I owe money, need money, are dependent on someone else and the house is not clean. By confusing money with states-of-being we have made money a pre-condition for enjoying life.

Start living that life now and stop waiting for money to make it happen. I am not suggesting that we stop paying the bills; they are part of being an adult in our society. Pay the bills as well as find the joy in each day. We can do these two things one small step as a time.

One way we can keep up with the bills is to not spend so much each day on the small things. This is called the “latté factor “, in the budgeting world.  I suggest that you stop using your debit card or credit card for the next 5 to7 days, use cash to buy the small things. This would be things like, coffee out, lunch out, breakfast out, the newspaper, gum and a drink with the girls. Don’t change your habits just keep track both daily and for that week. The reason I suggest using cash is it is easier to keep track. For example if you start the day with a $20 in your pocket and come home with $5 you know what you spent. Have fun and don’t judge yourself.

A form of exchange

Money is nothing more than a form of exchange. It’s not that money isn’t important, it is. However, it’s critical that we understand money for what it is. It is:  a method of exchange for goods and services. For example, I need bread, you sell bread; I give you money in exchange for the bread I need. I need a job, you are an employer; you give me money in exchange for my labour.

That is all money is: a means of exchange. Money is NOT happiness, security, love, independence, or any other state-of-being that money has mistakenly come to symbolize or represent for us. That’s not to say we can ignore money issues or that money isn’t important. Of course, money matters and of course we need to pay attention to it. However, we need to adjust our mindset about it. Accept it for what it is, a means of exchange. We need to learn how to manage our money in the same way we manage our household chores or any other of our responsibilities. Those responsibilities may not be fun, but they’re part of the determinants of adulthood. When we can separate our emotions from money, we can then be free to lead fulfilling and satisfying lives.

Happiness research shows that your level of income is not an indicator of happiness – people’s level of happiness has not changed significantly despite  increased standards of living.We live in one of the most consumer –oriented parts of the world. We spend 3-4 times more hours shopping than our Western European counter parts. In most parts of the world shopping is a chore. But in North America it is recreation.

With the increase in life expectancy many people are returning to work after retirement  for one of  two reasons, they are bored and do not think they can stay at home for 20 years. The other, but much more disturbing, is they have not got the money need to live. After 30-35 years in the work force and thinking of the golden years that dream is gone because of an inability to save, overspending or poor planning. Women are spending about 98% of what they earn and saving about 3%. Well below the 10% savings recommended for men and no where near the 12% for women.

Money is a form of exchange that we are required to use responsibly as we require our children to be responsible with their belongings. The problem is old habits and beliefs get in the way.  

A place to start

I have come to this point through life experience and observation.  After about 19 year of marriage I was suddenly single. As a result of the marriage breakdown I needed to find a place to live, a job; as the assets were tied up in joint accounts. No cash flow... That is me low cash flow. During these years I have gone from one bad job to the next; always being underemployed. During this time my income has not improve in relation to my skills or education. I met many women in the same place as me so, I decided I could impact women by becoming a financial planner only to discover this situation was a common thread even with the women that appear to have money. For these women cash flow was not the issue, but rather the over spending. This over spending is a common phenomenon across the nation. The average Canadian owes $1.16 for ever dollar they earn.

Through reading and self education I have learned that most spending is based in emotion and until we see what triggers our spending we will continue to over spend. (Advertisers have this one figured out.) I want to help women see how they are responsible for their own financial future,take control and make changes that will keep them out of the dumpster in retirement.

 Money can be a both a blessing a curse for many of us. We need to understand what it can do for us and take advantage of that. There is lots of evidence that depression, anxiety, stomach problems, and riskier behaviour are related to higher levels of materialism. We continue to consume because we have come to believe that a dream of love, comfort, and safety for ourselves and our children can be attained item by item.

When money begins to look like money, (not love, not security and not a dream) we can live with out feeling deprived.