What is conscious spending and how can you start your own conscious spending plan?
Lets first look at Unconscious spending to shed some light. Unconscious spending is when we spend without purpose, based on existing habits and emotional responses. Conscious spending is therefore choosing, with intention, where and how we spend money in alignment with our personal values and bigger life and financial goals.
I’ll use an analogy of eating habits to highlight the differences between unconscious spending, restrictive budgeting and conscious spending.
Money Diets and Healthy Spending
Unconscious spending is a little like eating whatever we want, good bad or indifferent simply because we feel like it, in the moment, or because we have a habit or pattern that already exists. We may manage this without over-eating or undereating but its unlikely to be balanced. Because it is unbalanced and reactive we eat too much of one thing and not enough of another and find ourselves in an unhealthy eating pattern.
When we go to the other extreme of restrictive budgeting, or a money-diet, we tend to omit the things we like in a bid to follow a prescriptive plan set by someone else. So we cut back to the essentials and “allowed” things and try to “stick” to the budget/diet. This is often why Diets fail, there is no room for us in them and the more we think about what we can’t have, the more we want it. So both diets and restrictive budgets often both fail.
Conscious spending is like adopting a healthy eating plan, choose what is good for us from what we want and need, that we also enjoy which brings balance. It helps us make free choices within a framework and is much more likely to succeed.
Identify your Values
Conscious spending is knowing ourselves well enough to choose what and where to spend, when and how much, so getting to know ourselves is the first step.
- What’s valuable to me?
- What do I love,
- What brings me joy.
- What fits toward some of my bigger dreams, goals and aspirations?
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If you’re not sure download a Values Wheel and score yourself in key areas such as Family, Social Life, Spiritual, Self Development and prioritise your scores from this. Our Money Membership has a whole video coaching session on this too.
We still have to spend on “needs” so use an A,B,C categorisation where A is everything essential that you must have to keep you and your family safe. This sets the spending amount for essentials. Then B for things that enrich your life and line up with your values (here’s how to Save to Spend for those) and C for the luxury or higher ticket spending that you can enjoy saving longer-term toward.
Use your Key values and goals to name your short term savings “spaces”. Set a financial goal for this space and that gives you the freedom to spend the amount you’ve set aside for that value or goal.
Conscious Spending Decisions
This values knowledge gives you a framework from which to make spending decisions. Use this new information to begin making money decisions. When you are looking to buy something ask yourself:
- Does this spend fit with my key values?
- Does it take me nearer or further from my goal(s)
- Will this spend mean I miss out on something I value more?
- If I saved this instead toward that bigger goal would that bring me more joy?
Then simply ditch the rest.
You are simply spending on purpose, with purpose, consciously, for healthy spending.
Building on this Conscious spending comes Ethical or Sustainable Spending – and then investing too. You may have values to support environment, not cause damage, avoid supporting certain companies or politics. This topic is a passion of mine and I’ll be covering this in more detail in next weeks blog.
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