Knowing Your ‘Value Categories’ Could Be the Key to Saving Big

julia roberts eat pray love cat

As the mantra goes, new year, new you savings strategy. So, where to start? We loved this tip from financial advice TikTok star and founder of Her First $100K Tori Dunlap: Define your ‘value categories.’ We’ll explain.

First, identify your discretionary income. In any budget, there are two categories: fixed and flexible expenses. Fixed expenses are the things you need to survive (rent, food, utilities, etc.). Flexible costs or discretionary income is anything you have left over after you’ve paid all your bills. Dunlap maintains that every person should be able to identify how much they need to spend in a given month (fixed) and how much they have left over (flexible).

Next, find those value categories. Once you know how much discretionary income you have left over (let’s say it’s $1,500 a month), Dunlap says you should zero in on three spending areas that matter most to you. For her, they are clear. “I love travel, eating food out and plants. I own about 50 plants now,” she says. The hard part? You have to ignore the rest. “I like clothes, I’ll drink an occasional coffee, makeup is fine, but those are not as important to me, so I don’t spend my cash on them,” she says, and hence they are not her value categories.

Then act and spend accordingly. Then act and spend accordingly. Let’s say you’re walking through your local mall. Temptation is everywhere, but if you know your value categories, what you can buy is clearly defined—if you’re Dunlap, that means yes to a new plant, but no to a pair of sunglasses. It doesn’t mean you can’t browse and consider other purchases, but if you’re on the fence about a spend, your value categories should be your guiding light.

Bottom line. This budgeting approach is about flexibility, and as long as you have discretionary income, there’s room for targeted fun.

5 Sneaky, Strategic Ways to Save $500 a Month

Rachel Bowie Headshot

Royal family expert, a cappella alum, mom

Rachel Bowie is Senior Director of Special Projects & Royals at PureWow, where she covers parenting, fashion, wellness and money in addition to overseeing initiatives within...