Reflection and Checking in with Our Priorities (Your Finances under Your Control)

Let’s take a moment to pat ourselves on the back for being so diligent and following through with the observation of our spending habits. Having a one month database is a great start, I would personally recommend a 6 month long observation in order to mitigate the risk of one-time-offs (e.g. buying an expensive suit for wedding you need to attend) and seasonality (e.g. ski equipment rent) affecting our analysis.

Our next step is to reflect on our observations and to see whether our behavior deviates from our values and priorities. To achieve this, I would encourage you to take a look at your Finance file and to note down the percentage of your total income spent on each expense category. Maybe you want to look at the absolute number and see whether that seems right to you.

For example, you might observe that each day you spend 7 EUR for lunch at work. Seems right, everybody does it, so should be just fine. Let’s do a quick calculation together, 7 EUR x 20 days = 140 EUR per month for lunch at work. OK, on an annual basis, this means 1680 EUR. Quite a hefty amount. Maybe this is your monthly salary. Does this make sense to you that you work 1 month in the year only to finance your lunches at work? Maybe you are fine with this or maybe you aren’t. You are free to make your own conclusions and this is precisely the point of the reflection time.

We have to make sure that our spending is in tune with our priorities and values

How do we do that? There is this quick and effective exercise proposed by the Minimalists in the video below.

Here’s what you have to do:

  1. Take a sheet of paper and on one side write down all of the things that you would like to do, call this sheet Someday. Anything that is important to You.
  2. On the other side of the sheet write down what you have done in the last 24 hours, call this sheet Today.
  3. Observe whether there are some similarities between Today and Someday.
  4. Could we take some Today activities out of our lives in order to make space for some Someday activities?

The purpose of this exercise is to see how your short-term actions (Today list) relate to your long-term values (Someday list). A great opportunity to tune it with yourself!

How does this relate to our financial situation?

The Today/Someday exercise helps us get back to our priorities in life. If we see for instance that spending time with family is one of our Values, then the fact that a huge budget chunk goes for vacations should not be a cause for concern. On the other hand, if you notice that you spend 10% of your monthly income on clothing and accessories and this is not amongst your priorities, you just do it because everybody else does, then maybe you can amend your spending to reflect better your goals, priorities and values. With the savings you can finance some activities which are in accordance with your priorities. This will bring much more balance to your life and you will get more happiness out of each Euro!

Going further, we will explore multiple opportunities to optimize our spending one category at a time, so that you can free up some money to invest in what is important to you. This way the Today and Someday lists will not look that far apart.

Links to the posts of the series Your Finance under Your Control

0. Getting Started

1. Observation and Filling in our Database

2. Reflection and Checking in with Our Priorities

Good luck!

Love,

Mrs. DNB

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s