Conscious Spending

Practicing Conscious Spending will create positive changes in your life. Learn how to avoid Unconscious Spending that can wreck your financial goals.

I have noticed that people tend to hold me to a very high standard when it comes to spending. As a financial planner, I think most assume that I am super frugal and never spend money. I frequently hear statements like “As a financial planner, you should appreciate … ” followed by how they saved money on a purchase. I recently signed up at a new CrossFit Gym in the area, and am now paying just over $100 a month for a membership. The reaction was swift – “You’re paying how much for a GYM MEMBERSHIP? I thought you would be smarter about your spending!” I’m paraphrasing of course, but the overall reaction wasn’t positive.

Most of my readers know by now that I believe in setting spending goals and living frugally. While this is all true, I also believe in Conscious Spending.

Think back over the last 48 hours. How have you spent your money? Open your bank statement and see if you remember every expense. Many of us end up going about our normal routine and spend money without even realizing it. I like to call this Unconscious Spending. Unconscious Spending is when we spend money without stopping to ask ourselves if this expense will actually make us happier.

I have learned that I do much better in a group setting when it comes to working out. While some can go run by themselves every day, I prefer to have a group to hold me accountable and provide the extra bit of motivation I need at 6:30 in the morning. I also value my health, and believe that I need to be working out 3-4 times a week to stay healthy. Because of this, I choose to spend a little extra money on a gym membership.

This expense is offset by not spending money on things that don’t make me happy. I don’t buy expensive clothes, drive a new car, or go out to eat every weekend. This isn’t because they are “bad” things to do, they simply don’t add to my level of happiness and satisfaction in my life.

Do you really love football and want the NFL Sunday Ticket? If you have the money and believe it will make you happy, for goodness sakes buy it. Then try to avoid the Starbucks coffee in the morning and brew a cup at home or at the office.

Above all, be sure you spend money on things that make you happy and healthy. This can include family vacations, gym membership, healthy food, etc. Offset these expenses by saving on purchases that don’t make you happy, or only make you happy for a very short while.

You will be amazed by the positive changes practicing Conscious Spending will create for you.

So what do you think? Are there things you pay “extra” for each month because they really do increase your happiness? Have you ever bought something that you thought would make you happy, but ended up not? Share in the comments section below!

Alan Moore is a fee-only financial planner and founder of Serenity Financial Consulting in Shorewood WI. Follow him on Twitter @R_Alan_Moore. You can contact him at alan@serenityfc.com, 414-455-5313, or visit his website at www.SerenityFC.com. Want more education? Download your free guide to the “10 Easy Steps To Securing Your Financial Future Today.”

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Mike B September 27, 2012 at 12:09 PM
We have a Financial Peace University class starting up in a couple weeks if anyone wants a proven plan to get out of debt, make a budget and stick to it, setup an emergency fund, etc. Info at http://www.oakbrookconnect.org/fpu
Alan Moore, MS, CFP® September 27, 2012 at 12:11 PM
That's wonderful Mike. I highly recommend Financial Peace University for learning how to manage cash flow and create a debt pay off plan. Thanks for sharing.
Quietwood Guy September 27, 2012 at 03:23 PM
I suspect as a person gets older, a larger percentage of your budget which could be considered unconscious spending is a result of decisions in the past which lock you into spending patterns. For example, the scale of housing options (apartment, house) and car options (new, used) are conscious spending choices that become unconscious spending after the decision is made. Another example would be the choice telephone options (hello I-phone 5?) whereby at the decision point, it is a decidely conscious spending choice that becomes an unconscious spend later on. It seems that the most effective way to manage your unconscious spending in a budget is to really focus on making wise large impact decisions. The cliche expression that addresses this is "Don't be penny wise and dollar foolish." I personally will make repeated small thought decisions on a shirt purchase or even a gym membership, as long as I am giving much thought to decisions about career, housing, car, and other larger decisions.
North Shore Newbie September 27, 2012 at 03:36 PM
I'm glad you brought this topic up. When you talk about financial planning and making good spending decisions I've found that a lot of people think it means they have to completely stop doing the things they enjoy. It's like the perception of someone who wants to lose weight but thinks that means they can only eat flavorless food from now on. It's not about eliminating spending completely but getting good value out of your purchases. I learned this lesson years ago when I bought an inferior product because it was 10% cheaper, only to be frustrated ever time I used it because it was of really poor quality. Being frugal is a good thing, but being smart about money is more important. The key is to put yourself in a position of financial strength in the first place so you have more options.
Alan Moore, MS, CFP® September 27, 2012 at 06:17 PM
Quitewood Guy, that is an interesting perspective. I hadn't thought about it in that way, but I agree with you. We can spend money intentionally, and then lose sight of the long term repercussions of those spending decisions. North Shore Newbie, excellent points. I can relate to saving a little in the short term, and end up paying much more in the long term. "Frugal" has negative connotations, just like "Budget." I prefer to tell people to spend less than they make, save some for the long term, and stop worrying about it!


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