You don’t have to think or feel this way, thanks to a flexible personal finance approach called conscious spending.
That doesn’t mean that some age-old, general guidelines for saving aren’t valid — such as saving 5% to 10% of your income and having a three- to six-month emergency fund, 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 guilt-free. I’m also going to invest, save, and make sure I can cover my rent,” Sethi said.
Whether wanting to save money, squash debts or have a little more fun is making you want to try conscious spending, you can apply this approach as soon as today. Here’s how.
Rewiring 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 College of Business in Omaha, Nebraska.
“It’s almost like unconscious eating,” he said. “We’re just without a plan, we’re not really paying much attention, especially using credit cards.”
What’s most important in undoing unconscious spending is asking yourself specific questions about your financial goals and life desires: Where has my money been going? What do I love spending money on and why? How much do I need for fixed expenses, such as bills and rent? How much do I want to invest and save, and why? How much do I want to set aside for impulse buys or charges, such as drinks with a friend or a parking ticket?
Your answers need to be very clear, Klontz and Sethi said. Saying you want to be able to do what you want when you want is abstract. But stating that you and your partner want to fly to Italy with extended legroom, visit for three weeks and watch the sun set over Rome while drinking wine? Now that’s a vision that’s vivid, specific, emotional and meaningful, Sethi said. “What’s not meaningful is just some spreadsheet with numbers in it. Truthfully, nobody cares.”
Answering these questions can help you feel excitement and clarity about your finances, identify what you care less about and live in alignment with what’s important to you. “Then, it’s a lot easier to cut in 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 anyone else thinks you should do.
A personal example: I recently decided that on workdays, I’d drink the office complimentary instant coffee instead of spending several dollars on lattes a few times per week. Weekends would be when I allow myself to indulge at coffee shops with friends. I decided this because on weekdays, needing more energy was my only reason for wanting coffee — whereas having money to enjoy better coffee and quality time at my favorite coffee shops on the weekends was more important to me. In this way, I get what I want out of my coffee-drinking by consciously focusing on what’s most valuable to me, rather than restricting all coffee purchases.
When you’ve already 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 appetizers while eating out, he said. These days, one of his “money rules” is to never question spending money on appetizers because “it gives me great joy to be able to buy any appetizer that I see looks good,” he added. “I don’t have to decide, ‘Should I pay this much? Or should I not?'”
If you want to give conscious spending a shot, try it 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 tweak,” Sethi said. “But overall, you’re going to start to get a sense for how it works and what you need to change. And then you just make the change each month after that.”
