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When you think about money, do you feel like living and being responsible are mutually exclusive? Does guilt eat you when you go out to lunch or have a $7 oat milk latte?
You don’t have to think or feel that way, thanks to a flexible personal finance approach called conscious spending.
“Unlike a budget that feels backward, a conscious spending plan lets you look ahead,” says Ramit Sethi, author of the best-selling book I Will Teach You to Be Rich and CEO of the blog of the same name. “Mindful spending is about spending lavishly on the things you love while ruthlessly cutting back on the things you don’t. It is not about limitation. It’s about being intentional with your money and then guilt-free spending it on the things you love.”
That doesn’t mean some old, general savings guidelines aren’t valid, such as saving 5% to 10% of your income and having a three- to six-month emergency fund, Sethi said.
But a conscious spending plan allows you to say: “Yes, I want to go on vacation. Yes, I like nice clothes. Yes, I’m going to splurge on these things guilt-free. I’m also going to invest, save and make sure I can pay my rent,” Sethi said.
Whether you’re looking to save money, pay off debt, or have a little more fun, it makes you want to try spending consciously, you can take this approach today. Here’s how.
The term “conscious spending” implies that people experience unconscious spending, says Bradley Klontz, a financial psychologist and associate professor of practice at Creighton University’s Hyder College of Business in Omaha, Nebraska.
“It’s almost like mindless eating,” she said. “We just don’t have a plan. we don’t really pay much attention, especially the use of credit cards.”
The key to eliminating unconscious spending is to ask yourself specific questions about your financial goals and life desires. where was my money going? What do I like to spend money on and why? How much do I need for fixed costs like bills and rent? How much do I want to invest and save and why? How much do I want to set aside for impulse buys or charges, such as drinks with a friend or a parking ticket?
Your answers should be very clear, said Klontz and Sethi. To say that you want to be able to do what you want when you want is abstract. But stating that you and your partner want to fly to Italy with long legroom, visit for three weeks and watch the sun set in Rome while drinking wine. Now it’s a vision that’s vivid, concrete, emotional and meaningful, Sethi said. “What’s meaningless is just a few tables with numbers in them. Honestly, nobody cares.”
Answering these questions can help you feel excited and clear about your finances, discover what you care less about, and live in alignment with what’s important to you. “Then it’s much easier to cut out areas that aren’t as important,” Klontz said.
Your answers to these questions make up what Sethi calls your “rich life”—your life and financial goals that are unique to you, uninfluenced by what anyone else thinks you should be doing.
Personal example. i recently decided that i’m going to have free instant coffee at the office on weekdays instead of spending a few bucks on a latte a few times a week. Weekends will be when I allow myself to go to coffee shops with friends.
I decided this because needing more energy on weekdays was my only reason for wanting coffee, while having money to enjoy better coffee at my favorite coffee shops on weekends was more important to me. This way I get what I want out of my coffee drinking, consciously focusing on what is most valuable to me, rather than limiting myself to all coffee purchases.
Once you’ve been intentional about what you value, you shouldn’t feel anxious, obsessive, suspicious, or guilty. When Sethi was a child, her family couldn’t afford to buy snacks when eating out, she said. One of her “money rules” these days is to never question spending money on snacks because “it gives me so much joy to be able to buy any snack that I see that looks good,” she added. “It’s not me who should decide. “Do I have to pay that much? Or shouldn’t it?’
If you want to give conscious spending a little fire, try it for a month. Then, using your bank statements or a budgeting app, review what happened, what worked and what didn’t.
“It won’t work perfectly the first time. It’s a system that you’re going to continually tweak,” Sethi said. “But in general, you’ll start to understand how it works and what you need to change. And then you just make a change every month after that.”