Joe Biden, the current US Vice President as of the time of writing (and possibly the most famous person from Delaware), is on record with a great quote:
“Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.”
I love this quote. While I know he’s quoting his own father, this quote strikes me as one of those simple and timeless utterances that sounds like it must have been around for ever. I would not have been surprised if this quote were originally attributed to Thomas Jefferson or some other historic figure. But no, it’s our veep.
Table of Contents
This is a test
Okay everyone, budgets out. Fire up Evernote, or Excel, or pull out that notebook you use to capture your spending. I want you to show me what you value.
… Um, you are keeping a budget right?
If you’re not keeping a budget, how do you know how much money you have? Or don’t have?
If you’re not keeping a budget, how do you make sure that you’re not letting money escape out of your life without being noticed?
If you’re not keeping a budget, how are you making plans for the future?
If you’re not keeping a budget, how do you know what you really value?
How a budget tells you about yourself
I ask these questions because the underlying premise is vitally important: You spend money on what is important to you. If you’re spending a large amount of your income on restaurants, then you probably value gustatory pleasures more than (say) clothing or travel. If you’re spending a large portion of your income on your car, then you may value the pleasures of the drive or how you appear to others, but perhaps more than some other category of spending. (Or perhaps you just have a really crappy car that requires tons of repairs. Or live in an area where you are too car dependent.)
The specific percentages aren’t important here. I don’t have any special rules about how much is too much, as it highly depends on the raw numbers, and where you live. (For example: conventional wisdom states that you shouldn’t spend more than a quarter of your income on your rent/mortgage. Conventional wisdom clearly doesn’t reside in New York City.)
So if you don’t know what you value, try this: at the beginning of this coming month, write down everything you spend, and what on. Sort them into sensible categories of your own choosing (food, transportation, clothing, fun, etc.). Then at the end of the month, tally those categories all up. See the raw numbers. Then divide by the total to see percentages. Then hold that information up and look at it carefully, for those numbers will reveal what you value.
My values
As should be a shock to no one who knows me, when I do this (and I do this every month), I find that after I take care of all my essentials, I place a heavy emphasis on putting money away for the future, on lots of travels, and on going out to eat. I wouldn’t necessarily say offhand that that latter category is something I value, but on further thought, it is a large component of my social life, so I guess it is. Budgets don’t lie!
But enough about me. Does keeping a budget help you know what you value? Did you find anything surprising?
And if you have any questions about how best to budget, please let me know and I’ll do my best to help. I’ll be writing more on this topic in future posts.
