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Conscious spending: Personal finance that’s smart and fun

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When you think about money, do you think being in the present and being responsible are mutually exclusive? Do you feel guilty when you go out to lunch or drink a $7 oat milk latte?

Thanks to a flexible personal finance approach called conscious spending, you don’t have to think or feel this way.

“Unlike a retrospective budget, conscious spending planning allows you to look ahead.”teach you how to get rich‘ said the CEO Blog of the same name“Conscious spending is spending extravagantly on things you like, as long as you ruthlessly cut costs on things you don’t like. It’s not about restrictions. It is to use it without feeling.”

That doesn’t mean the old general guidelines for saving, such as saving 5% to 10% of your income and having an emergency fund for 3 to 6 months, aren’t valid.

But with a conscious spending plan, you can say, “Yes, I want to go on vacation. Yes, I like clean clothes. Yes, I spend on these things without guilt. I’m going to do it,” said Sethi.

If you’re tempted to give conscious spending a try because you want to save money, pay less debt, or have a little more fun, you can apply this approach today. Method is as follows.

The term “conscious spending” means people are experiencing unconscious spending, says Bradley, a financial psychologist and associate professor at Creighton University Hyder College of Business in Omaha, Nebraska. Krontz said.

“It’s like eating unconsciously,” he said. “We don’t have a plan. We don’t pay much attention, especially when it comes to using credit cards.”

The most important thing in undoing unconscious spending is asking yourself specific questions about your financial goals and life desires. What do I like to spend money on and why? How much do I need for fixed expenses like bills and rent? How much money would you like to save by investing and why? How much would you like to set aside for impulse purchases or claims, such as tickets or parking tickets?

Your answer needs to be very clear, Krontz and Sethi said. But are you and your partner saying you want to fly to Italy with lots of legroom, stay for three weeks, drink wine and watch the sun set over Rome? , has become an emotional and meaningful vision, Sethi said. “What doesn’t make sense is just a spreadsheet with numbers. Honestly, no one cares.”

Answering these questions will help you feel excited and clear about your financial situation, identify the things you care less about, and help you live in line with what’s important to you. “That way it’s much easier to cut areas that aren’t as important,” Klontz said.

Your answers to these questions reflect what Sethi calls your “rich life,” your own life and economy unaffected by what others think you should do. constitutes a target.

A personal example: I recently decided to have free instant coffee at my office instead of spending a few bucks on a latte a few times a week during the week. On weekends, you can indulge in coffee shops with your friends.

I decided on this because the only reason I crave coffee during the week is that I need more energy, but to enjoy better coffee and quality time at my favorite coffee shop on the weekends. In this way, instead of restricting all coffee purchases, by consciously focusing on what is most valuable to me, I am free from coffee drinking. is getting what it wants.

There is no need to feel anxious, obsessed, doubted or guilty if you have already deliberately thought about what you value. When Sethi was a child, he said his family could not afford appetizers while dining out. These days, one of his “money rules” is to never question spending money on appetizers. “You don’t have to decide, ‘Should I pay this much?’ Or shouldn’t I?

If you want to experiment with spending consciously, try it for a month. Then use your bank statement or budgeting app to see what happened, what went well, and what didn’t.

“It doesn’t work perfectly the first time. It’s a system that you continually fine-tune,” says Sethi. “But overall, you’ll start to get a feel for how it works and what you need to change. After that you just change it every month.”

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