Sticking to a budget can be hard. Those who struggle are often left feeling guilty and discouraged. If you’re facing these difficulties, focusing on saving might be the wrong approach. Adjusting your approach from being a saver to being a conscious spender could be the change you need to enjoy the income you have.
I have often caught myself wondering about or heard a friend commenting on the spending habits of friends or coworkers. The fact that we are shocked to find out an individual would spend $600 on a bag or $200 on a dinner, might say a lot about your own attitude toward saving. By considering the concept of conscious spending, you might begin to look at this type of spending differently.
Conscious spending is the approach of knowing or deciding exactly what you are going to spend your money on. To take it further, it’s about laying out a plan of how you’re going to allocate your spending, whether you want to buy new clothes, enjoy a nice dinner or put your money toward rent or savings. By designing a spending plan for your money, you could free yourself from guilt about spending.
Why is conscious spending something you should consider? First off, most Americans are raised with a spend-first mindset. The idea of saving money, much less being frugal, is rare and difficult to maintain. For example, many recent college graduates return home to live with their parents. This phenomenon often occurs because of a lack of money management and a spend-first, react-later mindset. If you plan ahead and understand what you want to spend your money on, you might find yourself adjusting costs accordingly.
Now, don’t get conscious spending confused with being frugal. This approach is not about buying the cheaper cereal or skipping out on popcorn at the movie theater. Instead, it’s about evaluating your income and spending on what matters. If cereal is important to you, buy the best and reduce spending in some other area. By spending more on the things you enjoy most, you could enjoy life more while cutting miscellaneous spending costs.
If you can see yourself becoming a conscious spender, here are a few points to help you get the most from this approach.
- Pay Yourself First – Make sure you pay for the bare essentials, such as rent, food, etc. If you have investment goals, pay yourself enough to complete this goal.
- Attack Debt Instead of Budgeting for It – With a conscious spending mindset, you will act more quickly to spend money on paying off credit cards or making home improvements. Try using the “Debt Snowball” tactic, which entails paying off quick debts first.
- Miscellaneous Spending — Find areas in which you can cut back spending and apply those extra dollars to buying things you like or covering basics.
A great quote from Ramit Sethi states, “Spend extravagantly on the things your love, and cut costs mercilessly on things you don’t.” This is the exact attitude conscious spenders need to adopt.