How I Ended Up With a Lifestyle-Based Budget

I’ve often heard that the way you spend your time reflects your true priorities. Your budget does as well, or at least it should.

Ann Lappe pointed out that, “Every time you spend money, you’re casting a vote for the kind of world you want.” I believe that, to an even greater degree, you’re casting a vote for the type of life you want to live. You’re also taking a step toward, or away from, your authentic self.

Whether or not we’re aware of it, we are shaped by our spending and saving habits. Just as, “We are what we eat”, our identity is reflected in what we buy. Just as, “What you think, you become” – Buddha, what you purchase, you prioritize.

Trial & Error

I have a confession – I’m not a fan of the word budget. Although I understand (conceptually) the benefit of having one, the term still makes me squirm. It feels restrictive, limiting.

At some point, I stumbled upon the idea of crafting a spending plan instead of a budget. That seemed like something that I could get on board with. After all, I love planning! In fact, some of my lists have lists…

Unfortunately, I struggled with my spending plan. It was great in theory, but there were too many exceptions to my rules. And, it turns out, I’ve never had a “normal” month.

Unwilling to accept defeat, I tried a cash flow analysis. Instead of attempting to control my money, I simply watched it. I’d like to say I learned a lot about myself, but I actually learned that my spending didn’t accurately reflect who I was. And, I was certainly not using money as a tool to move myself in the direction of who I wanted to become.

Priority-Based Allocation

My top priorities include spending time with friends and family, traveling to see the wonders of the natural world, and continuously learning. I care deeply about eating nutritious (mostly plant-based) food, fitness, sleeping soundly, and staying healthy as I age. My main hobbies include biking, hiking, paddle boarding, and social dance. Sadly, someone would not have been able to deduce any of those things by analyzing my spending habits.

After taking a deeper dive, I found that I was spending lavishly in a few areas that I didn’t care much about, and scrimping in some that were near and dear to me. I started to move money from those places that mattered less to those that mattered more, based on my core values, long-term financial goals, and lifestyle priorities.

Some of the changes were minor. For instance, I traded some of my streaming services for an audible membership. I also cut back on dining out and shifted those funds to groceries, and a few new cookbooks.

My husband and I decided to save in advance for anything that costs $500 or more, which gets added to a list. Most of the items that we add come and go, but a few (like travel) remain. As soon as we return from a trip, we start replenishing our fund. We were traveling, on average, three or four times a year. Last year we went on a short trip at least once a month.

Other changes have been more major. For example, we’ve cut spending in numerous areas to facilitate our plan to purchase land, in a few years, where we’ll build our “forever home”.

Expected and Unexpected Benefits

One key shift that resulted from this strategy is that, whenever I reach for my credit card, I pause to consider whether what I’m about to buy will enhance my lifestyle. If it won’t, I debate whether the money would be better spent on something from my lifestyle wishlist, or should be banked to fund a larger purchase later.

Another advantage of linking our saving and spending to our lifestyle desires and dreams is that it both added detail to our image of the ideal future, and also helped bring it into focus. Now that we have a clear picture of what we want our “life after employment” to look like, we’ve become more interested in doing things that move us in that direction more quickly.

In sharp contrast to my previous mindset, investing has become my default inclination, followed closely by saving, and the desire to buy shinny new things has become a distant third.

I would describe what I do now as a “spending strategy” because I’m strategically allocating funds to my highest lifestyle priorities. As a result of this new approach, using my “lifestyle-based budget”, I can be confident that I’m living my best life now, while staying on course toward my long-term goals and vision of the ideal future.

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