Understanding your Money Dials to unlock your personal finance game

While many people dream of spending extravagantly without feeling guilty, it can be an extremely difficult mindset to achieve.

However, there is a concept that everyone can adopt which will help you understand the difference between the things you think are important and those that are actually important.

American entrepreneur Ramit Sethi has identified ten ‘Money Dials’ to help people get to grips what they actually love to spend money on. These are as follows:

• Convenience: Spending on anything designed to make your life run more smoothly.
• Travel: For people who value travel and holidays as their biggest priority.
• Health/fitness: Do you want to spend lavishly on health and fitness? This is your category.
• Experiences: For anyone who values unique experiences over material possessions.
• Freedom: Being able to use money to do whatever you want.
• Relationships: The Money Dial for people who make friends and family their priority.
• Generosity: For people who want to help others – giving is good for the soul!
• Luxury: The emotion and feeling of buying luxury items. What does luxury mean to you?
• Social status: Many people value how they are perceived by others.
• Self-improvement: Anything that makes you a better person.

Many of Sethi’s Money Dials overlap. For instance, splurging on a yoga retreat falls into the health/fitness and self-improvement categories.

Although it is still feasible to identify the primary category it falls into, it is important to note that this may differ between each individual.

Using yoga as an example, some people will take this up purely because they want to feel healthier and boost their core fitness levels.

For others, practicing yoga may simply be about learning a new skill. They may already be fit and healthy, but taking up yoga adds another string to their bow.

Once you have nailed down your number one Money Dial, it has the power to influence the way you spend your money by removing guilt from the equation.

It becomes a strategy that allows you to identify the things that are truly important to you and turn the dial all the way up to maximum.

Where you live in the world can greatly influence your primary Money Dial. For example, as business consultant Ahmed Bilal points out, priorities for people living in a country with electricity outages and water shortages are going to be more focused on life essentials rather than looking at higher self-actualisation purposes.

And yet there is no one size fits all approach here – individual preferences come into play as well, with plenty of variance possible.

Another great example of Money Dials in action is the travel category. Many people love getting away and are great at getting the best deals.

However, if someone really loves travel, what does that look like? Could you sacrifice elements of your social life to travel more? Which one is your priority?

Perhaps you could push things further and focus on saving for your own holiday home, thus providing yourself with the opportunity to get away whenever you want.

While some of these elements may seem like the impossible dream, focusing completely on your chosen Money Dial can be the key to a better personal finance game.

To challenge yourself, identify your number one Money Dial – maybe it’s the holiday home, perhaps  a luxury watch or even the car you have always dreamed of owning.

Work out how you are going to get to the point of saving the money you need and when you hit your target, take the plunge.

This will undoubtedly be a significant outlay for many people, but do not feel guilty. This is the whole point of a Money Dial.

People are often programmed to feel uncomfortable about spending money on the things they love, but life is much too short to allow this to happen.

By zoning in on your Money Dial and making whatever you dream about happen, you will feel empowered by the joy this brings to your life every day.