How often do you spend on certain things and later feel guilty about it? I know I’ve been down that road a few times. Perhaps what you spent on wasn’t needed, or it wasn’t worth the money. Or maybe, you never really used it after making the purchase. This happens when we are not conscious of our spending.
Being conscious means actively choosing to make certain spends, and eliminate others. The road to becoming a conscious spender may seem difficult, because spending decisions are not always rational. There is an element of emotion involved.
Conscious spending enables you to align your spending habits with your values. Let’s take a look at a few ways as to how we can achieve this.
1. Understand the kind of spender you are
When it comes to buying something, research says that our brains work in one of these two ways. Either we feel the joy of a desire being fulfilled, or we feel the pain of parting with our money.
Think about which of these two categories you fall under. This knowledge is the first step to becoming a conscious spender.
2. Track your expenses
Keeping a mental track of expenses is the easiest way to lose track of your money. Use an app, notebook, or a spreadsheet to keep a regular, documented track of your expenses. It will give you insight into your spending habits. And you could use these insights to make changes for the better.
For instance, let’s say you’ve been planning a weekend trip, but haven’t been able to save up for this trip. When you track your expenses on a regular basis, you might realise that you’ve been overspending in areas that don’t mean much to you. Deliberately shifting your spends from the meaningless to the meaningful will add a lot more value to your life.
3. Differentiate between discretionary and non-discretionary spends
A discretionary spend is akin to a want, whereas a non-discretionary spend is like a need. The key to being a conscious spender is to understand the fine line between these two.
It is easy to convince yourself that a want is a need. For example, clothing is a need, wearing clothes made by Zara is a want. Food is a need, being fed by Dominos is a want. So when it comes to a want, think twice, and ask yourself these three questions:
1. Why am I making this spend?
2. Does it really matter to me?
3. Have I budgeted for it?
Give yourself a green signal to make the spend only if the answers to those three questions are a unanimous yes.
Remember, money is a limited resource. If you are a conscious spender, you’re utilizing your resources in the most efficient and wise manner. It’s a road worth taking, I’d say.
