Starting the year off with good intentions is nothing new, but if you are interested in saving money and feeling better about yourself and your decisions, this can be your year of spending consciously. Keep reading to learn a few minor tweaks you can make to your routine.
What does it mean to spend consciously?
Conscious spending is about taking back control over where you choose to spend your money. However, it is also about finding better options for your purchases and being mindful of where your money is spent. This doesn’t always mean cheaper, but that is an important determining factor. Conscious spending also aligns with your values. Consider some of the below questions when choosing where to point your purchasing power:
- Could I buy it second-hand?
- Will it last?
- Is it recyclable?
- What packaging is included?
- Is it sold locally?
- Is it produced locally?
- Do I know someone that offers this service?
- Is it fair trade?
- Does the company support a specific cause?
How can I start to spend consciously?
Conscious spending is not about denying yourself, but rather it’s about prioritizing purchases that matter to you. Ramit Sethi points this out in his book, 'I Will Teach You to be Rich.' For some, this will mean having a nicer car; for others, it could involve going to the movies every week.
With conscious spending, the aim is to arrange your spending to have the funds for what personally matters. To do this, we recommend making a flexible budget and continuing to be watchful of where you are spending your hard-earned cash.
Step One: Your Needs
Typically, about 50% of your monthly net income should be basic necessities. These can include:
- Rent or mortgage payments
- Utility bills
- Groceries
- Medication
- Insurance
- Car payments, gas, or transportation
- Minimum debt repayments
Step Two: The Fun Stuff
We highly recommend budgeting approximately 30% of your income for the luxuries and treats that make you happiest. These will be entirely personal; your heart might flutter with thoughts of new designer lingerie, whereas someone else needs a weekend away every month to recharge. However, if you struggle to find meaning and happiness, it could be time to research depression medication.
Step Three: Your Future
By putting at least 20% of your monthly net income towards your future, you set yourself up for less anxiety later in life. The earlier you start consciously considering your investment goals and retirement plans, you need to save less every month. This step can include such items as:
- Debt payments above the minimum
- Emergency savings fund
- Retirement savings plan
- Putting additional money on your mortgage
Spend on the things that make you happy and avoid unnecessary purchases that don't bring you joy. That is the basis of conscious spending and one that will allow you to flourish this year.
Photo: Pexel