You don’t have to think or feel this way, thanks to a flexible approach to personal finance called mindful spending.
That doesn’t mean that some old general guidelines for saving are invalid, such as saving 5% to 10% of your income and having an emergency fund for three to six months, 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 spend on these things without feeling guilty. I’m also going to invest, save and make sure I can cover my rent,” Sethi said.
Whether wanting to save money, pay off debt, or have a little more fun makes you want to try mindful spending, you can apply this approach as early as today. That is how.
Reprogramming your spending habits
The term “conscious spending” implies that people experience unconscious spending, said Bradley Klontz, a financial psychologist and associate professor of practice at Creighton University’s Heider School of Business in Omaha, Nebraska.
“It’s almost like eating mindlessly,” he said. “We just don’t have a plan, we’re not really paying much attention, especially using credit cards.”
The most important thing to undo unconscious spending is to ask yourself specific questions about your financial goals and life desires: Where has my money gone? What do I like to spend money on and why? How much do I need for fixed expenses, 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 purchases or charges, like drinks with a friend or a parking ticket?
Your answers should be very clear, Klontz and Sethi said. To say that you want to be able to do what you want when you want is abstract. But say you and your partner want to fly to Italy with more legroom, visit for three weeks, and watch the sun set over Rome while drinking wine? That’s a vivid, specific, emotional and meaningful vision, Sethi said. “What doesn’t make sense is just a spreadsheet with numbers. To tell you the truth, nobody cares.”
Answering these questions can help you feel excited and clear about your finances, identify what matters least to you, and live in alignment with what’s important to you. “So it’s much easier to cut into areas that don’t matter as much,” 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, not influenced by what others think you should do.
A personal example: I recently decided that on weekdays, I’d have the office’s complimentary instant coffee instead of spending several bucks on lattes a few times a week. Weekends would be when I would allow myself to enjoy coffee shops with friends. I decided this because on weekdays, needing more energy was my only reason for wanting coffee, while having money to enjoy better coffee and quality time at my favorite coffee shops on weekends was more important to me. In this way, I get what I want from my coffee consumption by consciously focusing on what is most valuable to me, rather than restricting all coffee purchases.
When you’ve intentionally thought about what you value, you don’t have to feel anxious, obsessed, doubtful, or guilty. When Sethi was a child, his family couldn’t afford to buy snacks while he went out to eat, he said. These days, one of his “rules of money” is to never question spending money on snacks because “it gives me so much joy to be able to buy any snack I see that looks good,” he added. “I don’t have to decide, ‘Should I pay that much? Or shouldn’t I?'”
If you want to give mindful spending a try, give it a try for a month. Then, using your bank statements or a budgeting app, review what happened, what worked, and what didn’t.
“It’s not going to work perfectly the first time. It’s a system that you’re going to continually adjust,” Sethi said. “But generally, you’ll start to get a sense of how it works and what you need to change. And then you just make the change every month after that.”