One of the keys to designing a great lifestyle is to align your spending with your values, or to practice conscious spending. But what does that mean, exactly? If you showed me your budget would I be able to tell if you’re a world traveler, a wine connoisseur, a golfer, a philanthropist, an outdoorsman, or a gastronome?
Too often our spending is misaligned because we prioritize the wrong categories. We say we want to travel, but then we buy too much house and finance two vehicles, which eats up all of our disposable income. We say we want more time to spend with family or to pursue leisure activities, and then we buy a house in the suburbs with a dreadful work commute and then refuse to pay for someone to help clean the house or cut the grass.
Related: Is outsourcing the key to happiness?
Everyone has an area that they love to spend money on – or would love to spend money on some day. Personal finance author Ramit Sethi calls these your Money Dials – because you can tune them up or down just like a dial.
Here are the 10 Money Dials that he identified as key areas that most people are excited to spend money on:
- Convenience
- Travel
- Health / fitness
- Experiences
- Freedom
- Relationships
- Generosity
- Luxury
- Social status
- Self-improvement
The litmus test is this – If you had $25,000 to spend on any of the above categories, the one that comes instinctively to you is likely your number one Money Dial.
My Number One Money Dial
My number one Money Dial is travel. It used to be in the “some day, maybe” category, but a few years ago my wife and I decided that we would spend more intentionally on travel, and that resulted in some epic trips to the west coast, to Maui, to Scotland and Ireland, and to Boston (to name a few). We now have our travel schedule filled up for 2022 with trips to Italy, the U.K., and France throughout the year. We are excited to travel and regularly talk about where we want to go next and what we want to do.
But even though travel is our top Money Dial that doesn’t mean we had cranked it up to a 10 out of 10. I still had a scarcity mindset when it came to our travel. I naively wanted to fund everything on travel points to save on cash. While our trips were enjoyable, we dealt with trade-offs like multi-layover flights and hotel stays on points instead of a spacious Airbnb in our desired neighbourhood.
For our flight to Edinburgh, we flew economy with a long layover in Chicago. Our seats from Chicago to Edinburgh were in the last row of the plane where we slept for about 25 minutes on an eight hour flight. Every time someone went to the bathroom they would grab our seats on the way by and the bathroom light would illuminate the back of the plane.
My mindset was about quantity, not quality. Minor inconveniences like this were fair trade-offs to conserve travel points and cash. After all, more trips is better than fewer trips, right?
Related: Exactly how I redeemed more than 1 million points for travel
That trip taught me a lot. First, we absolutely loved traveling and couldn’t wait to go back overseas. Second, it would be worth it to increase our travel spending and avoid these minor annoyances. I’m talking about direct flights, using points to upgrade to business class, splurging on a spacious and well appointed Airbnb, and spending on experiences in our destinations of choice.
The result: We increased our annual travel budget to $25,000. We got Aeroplan 35K status this year by spending $10k on the American Express Aeroplan Reserve credit card last year. This gives us priority check-in, boarding, and baggage handling – not to mention lounge access. We upgraded to business class for our trips to Europe this year. We booked a beautiful Airbnb right across from the Eiffel Tower. We bought tickets to see Wicked in London – an absolute dream for my wife and oldest daughter.
We’ve cranked up this Money Dial to a 10 out of 10.
My Low Priority Money Dial
Ramit has another saying that you should spend lavishly on things that bring you joy, and cut back mercilessly on things that don’t. For me, that’s spending on vehicles. I could not care any less about the car I drive. It gets me from point A to point B – that’s it. As I’ve transitioned to working from home full-time, we sold our second vehicle because we didn’t drive it for a year, and we drive so infrequently now that our 2013 Hyundai Sante Fe might easily last another 10 years.
That’s fine by me. There was a period from late 2012 to 2016 where we didn’t contribute to our TFSAs because of that stupid car payment – $832/month. My spending didn’t match my values during that time.
I’d rather take that $10,000 per year and put it into our travel budget, and that’s exactly what we’ve done.
Combining Money Dials
Health and fitness is an area that is important to me and my wife but we don’t spend a lot of money on this category. We converted a spare room in our basement into a gym with a bike, treadmill, free weights, and a bench (equipment paid for long ago). During the pandemic we ditched our pricey gym memberships and now use the Peloton digital app for strength, cycling, yoga, and running programs. The cost is just $17 per month.
But we also love running and competing in races. We typically do these races locally, or in Calgary, but what if we combined our love for running and competing with our love for travel?
This year we’ve entered the Banff Marathon (okay, my wife entered the marathon and I chickened out and opted for the half-marathon). We’re going to stay at the Banff Springs Hotel and we’ve treated ourselves to the VIP race experience that includes access to the VIP lounge before and after the race, plus a post-race massage.
We have always talked about entering a half-marathon (for fun!) in Europe or in the U.K. What a great way to combine our favourite Money Dials.
For others, this could be a wine tour in Italy, or a golf trip to St. Andrews. As Ramit says, your rich life is yours.
Changing The Dials Over Time
We all go through different phases in our lives and so it’s only natural for our money dials to change over time. I’ve never been a fan of paying for convenience. If there was a delivery charge – I’d just go pick up the order. And, why pay someone to clean the house or cut the grass when you could just do it yourself in your spare time.
But, again, the pandemic has shifted our priorities. We don’t mind paying for grocery delivery because we value our free time in the evening and on the weekend. Sure, we could go out during the day, but I figure my time is worth about $250 an hour – why take an hour out of a busy work day to grocery shop when I can order everything online in about 5 minutes and pay between $5 and $10?
We subscribe to a grocery delivery service from Spud.ca that comes every Monday and supplement that with online orders from Save On Foods once a week. Worth every penny.
I mentioned how travel was a “some day, maybe” desire for us years ago. But we were still getting our finances in order back then and our kids were too young to enjoy a big trip. We prioritized filling up our RRSPs and TFSAs in those years. Now that we’re “coasting” with fully maxed out registered accounts (and no car payment), we have the cash flow available to turn up the dial on our travel spending and make the most out of those experiences.
Final Thoughts
Show me your budget and I’ll tell you your priorities. Do they align with your values? With what you absolutely love spending money on? What if you could turn that dial all the way up to a 10 – what would that look like? Tell me in the comments.
One final idea – if you could allow yourself to spend $500 on something extravagant, what would you buy? Maybe that small indulgence can help you think about your own Money Dials and how you want to design your lifestyle to maximize enjoyment.
