Conscious spending

This is a key concept I use in my course “Managing Your Finances and Life Plan”, it’s about making sure that what you spend really matters to you rather than letting your hard-earned money slip through your fingers in a meaningless way.

There’s a lot wrapped up in the way we earn and spend our money - there are very few people who can honestly say they have a great relationship with money.

Do you feel negative about your financial situation in some way? Most people do. Do you spend on things that you think you shouldn’t? Are you extravagant and then find you’re scratching to pay basic bills? Do you think that you’re “bad with money”? Do you wonder why your friends seem to spend a lot and you can’t keep up with them?  There are so many negative emotional responses associated with money – it goes deep and is often multi-faceted. 

Part of this issue is about absorbing other people’s views and beliefs about money, most likely our parents and people we spend time with.  For example, if your parents say that money is hard to come by and you need to work long and hard to make a decent income – then you’ll likely carry this perspective with you through life, making decisions on this basis.  Or if money is “easy come, easy go” then you’ll probably make money but you might not be able to save it.

It doesn’t have to be that way – we can reset our relationship with money and resources. A practical way to do this is being clear about what you’re spending your money on and making some decisions about where you want to channel your resources.

The aim is to be able to spend your precious resources on things that make a positive difference to your life or the people you want to share it with.  So, you might spend your money on a new winter coat that you’ve saved for and taken time to find – one that makes you feel good wearing it, luxurious, comfortable and toasty warm.  Something that you wear all winter and for years to come. 

As opposed to buying something that you really don’t need that you buy and then don’t use because it makes you feel bad about yourself because you really should have put the funds towards paying for new tyres for your car. 

Another example of unconscious spending is that your really don’t know what you spend on work lunches and coffee and don’t realize that in a week you spend between $100, $200, $300 dollars that you weren’t even aware of.  While you have to eat, there are more economical ways to do this, such as taking your own lunch some days, meal prep at the beginning of the week or using leftovers etc. Or you may decide that you are happy to pay for your lunches because planning ahead, spending the time preparing food is more bother than it’s worth. That’s being more conscious about your spending - making a decision rather than just letting things happen.

Lots of people roll their eyes when you talk about a budget – they think of needing to go without and having no fun.  Really a budget is a plan about your money with numbers attached – it can be as detailed or broad as you like - you don’t have to account for every cent.  It should give you a guide about things that you might decide to spend your money on and other things you consciously decide not to spend your money on or at least minimise them. We all need to make sure that what we’ve got coming in (our income) is more than our outgoings (expenses), that we can cover our basic living expenses as well as to consider longer term needs.    

“A budget is telling your money where to go instead of wondering where it went.” Dave Ramsey

Having an awareness of where your money is going and where you want to direct it will allow you to spend on things that do make an impact on your life – both in the short-term and the long-term.  Having this awareness will allow you to have some ‘fun money’ so you can buy some things you really want and/or need in a conscious way, rather than letting your funds slip through your fingers.  So buy the coat, go on the trip and save towards a home – do it consciously and feel good about it.

For more information see my website: www.lifelaunchpad.com.au and the course “Managing Your Finances and Life Goals”.