One important factor in planning a financial strategy, and a step so often overlooked, is taking a look at the emotions behind the purchase. Emotions are closely linked to financial habits. If you spend time thinking about the philosophy behind your purchases, you will likely find yourself in a better financial situation.
Everyone has a different goal in life, but I’m going to guess that most of us hope to make a positive impact on the world. So, how can we do that with mindful spending? Being a leader and making a positive impact takes many forms. Some people make an impact on the direct service of their job, through financial donations, still or by modeling good behavior and asking those around them to do the same. However, no matter how you plan to be purposeful in your life and with your actions, ensuring a solid foundation in your personal well-being is important. We cannot take care of others if we cannot take care of ourselves.
Start by thinking about the two things that you spend the most money on, excluding essentials such as rent or bills. The answer will be different for everyone. Next, think about what this large expense does for you. Ask yourself, “Does this expense have a purpose?” That purpose could be personal enjoyment, necessity, gifts, or more. If every dollar you spend is with a purpose, you are far ahead of the pack. Most of us spend money and cannot always remember what we bought. Are there meals you don’t remember or events that you went to, not because you were interested, but because a friend wanted to go?
For the next week, I challenge you to think about your money as you use it. Don’t blindly swipe your card or hand over cash. Be purposeful with your spending. Think about how the purchase aligns with your values and your goals. Is the purchase necessary? Is there something better that you could do with that money? Is the purchase in line with the type of person you see yourself as or the person you want to be? Is there something you want more than where you’re currently spending your money? Do you want to start your own business one day? Could you be saving the money for that? Does someone you care about have a birthday coming up? Whatever it is, just think about it. Once you have carefully thought through the expense, then go ahead and make it, but be purposeful about it.
Over time, you will see what expenses are fulfilling to you, and you will have an easier time saying no when something doesn’t serve a true purpose. Simply being aware of your financial habits and motivations is the first step on the journey to proper money management.
Guest Contributor: Natalie Daniels, AFC®