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The forces of saving and spending have always been at odds, but people are gradually turning towards a more mindful approach to their money. According to a 2016 Bankrate study, millennials — a generation plagued with student debt and poor job prospects — are more focused on saving money compared to previous generations. This goes hand-in-hand with a changing financial attitude that values experiences over things. Consumers are beginning to practice mindfulness not only in their daily activities but in their spending habits as well.
Elephant Journal, an online lifestyle magazine, cites four main pillars of mindful spending: clarity, commitment, consistency and courage. Develop clear savings and spending goals, differentiate between needs and wants, be consistent in your approach and have the courage to say “no” to impulses. When used together, these steps help to develop a healthy financial routine that can last a lifetime. With a little discipline and practice, your values and relationship with money can change for the better, giving you more control over your finances.
1. Organize what you have.
The first step to reforming your spending habits is to assess what you already have. We live in a consumer-driven culture fueled by material wants, and with our focus constantly on the latest-and-greatest products, we often forget to appreciate the nice things we already have. Taking a step back to recognize the things you’ve accumulated will help you to better prioritize new needs and wants. For example, if you never wear that stylish hat you splurged on a few years ago, it doesn’t make sense to buy another one that will just end up in the back of your closet.
This retrospective analysis extends beyond just clothing and material possessions. Take a look at your living habits and ask what brings you the most joy. Often the experiences we splurge on can be replicated for free. Bars, restaurants and breweries are great places to meet up with friends, but the company is what matters, not necessarily the place (and especially not the expense of going out).
2. Separate needs vs. wants.
This differentiation can be tricky to understand, but in general, a “need” is something you cannot live without. Food, transportation and basic clothing are examples of necessities. “Wants” are items you like but aren’t required for survival or for meeting basic needs. Designer clothes or new outfits, expensive pieces of jewelry and the latest electronics are examples of “wants.” Sorting needs versus wants can help you identify where your money is going, and how it can be better allocated. When you are shopping and see something you like, it’s important to ask, “is this something I actually need?”
Consider doing without the item for a period of time (also known as, “sleep on it”). If it’s a need, you’ll notice its absence. If it’s a want, chances are the impulse to have it will pass, thus saving you money. More often than not, people who take time to think over a purchase end up making a better decision with their spending. Putting off purchases gives you time to change your mind or find it for a better price. What’s more, delayed gratification can help you form healthier habits, as it eliminates the regret that stems from impulsive, instant gratification-driven purchases.
3. Use discounts wisely.
While signing up for a favorite store’s email newsletter or following them on social media seems like a wise savings maneuver, this often ends up costing you more. These stores inundate you with sales emails that create a false sense of urgency and ultimately tempt you into buying something you wouldn’t otherwise consider. This tactic (and other marketing strategies) are designed to hijack your decision-making and influence your spending to benefit retail bottom lines.
Being a mindful consumer doesn’t mean you have to pay full price for items you’ve thoughtfully decided to purchase, however. Waiting for sales, searching for coupons, comparing prices and negotiating with salespeople are all effective ways of saving money. Pursuing these opportunities puts you in the driver’s seat of your purchase decision and enables you to choose the best method for procuring a discount.
4. Ask questions.
When it comes to spending, ask yourself a few questions. First and foremost, ask what value the item, service or event has to you and your happiness. That new car looks really cool, but will it bring you actual happiness in the long run? Analyzing the value of everything you purchase also helps you to develop a sense of need versus want, and helps you to organize your life better.
AOL finance has a great set of questions for you to consider, like “What do I gain; “What do I give up;” and “Who else does it help or harm?” If it’s helpful, create a set of questions on paper to consider before a major purchase, or a list of needs versus wants and reasons why you should or shouldn’t buy a certain item. Once you have this trick down, you’ll be better prepared to tackle big financial decisions in the future.
Making a list of all your monthly expenses will help you discover how much of your budget you can set aside for spending or saving. It’s normal and even healthy to have a “fun money” fund, but making sure it doesn’t take up too much of your monthly budget is essential. Whether you’re building an emergency fund or planning a big purchase or vacation, calculate how much money you can set aside to save toward these expenses. This will help curb impulsive spending since you’ll have a clear goal in mind of where you’d rather have your funds go.
Another helpful tool is to take the money you would spend on something impulsive, and instead stash it away into a savings account or travel fund. Seeing that money add up over time can help you not only see how much you might be wasting on impulse buys, but also give you more motivation to continue saving.
6. Shop with cash.
Credit and debit cards can be the enemy of a healthy budget when abused. NerdWallet reported the average credit card debt of American households in 2016 was over $16,000. These plastic methods of payment reduce the pain of paying, making it far too easy to make a purchase. This dissociation contributes to ballooning balances that we often let climb to exorbitant rates. Shopping with cash allows you to have a tangible relationship with your money, and enables you to only spend what you have. Instead of reaching for the credit card, keep cash on hand for discretionary purchases to discourage unnecessary spending.
7. Review spending regularly.
It’s easy to pocket a receipt after a purchase and forget about it. Instead, start reviewing your purchases daily or weekly to keep on top of all your expenditures. Notice patterns, like morning coffee purchases or how often you dine out. Notice how much your habits add up your spending, and see where you might be able to trim your budget. Reviewing bank statements is important so you can be aware of any false charges or a rise in auto-payment bills.
8. Discipline with rewards.
It’s no surprise that discipline is hard, but developing a rewards system helps you to avoid burnout and stay motivated. Rewarding yourself for responsible spending doesn’t have to cost a lot, which helps perpetuate your newfound mindful state. Treating yourself can be as simple as visiting a free museum or park, buying a pint of your favorite ice cream, or watching an episode of your favorite show on Netflix. After all, training yourself to take pleasure in the enjoyment of the little things is at the core of a mindful lifestyle.
Kendal Perez is a Savings Expert with CouponSherpa.com, a popular outlet for online and in-store discounts. She’s also a source for money-saving tips and advice with regular contributions to US News & World Report, Bankrate, GOBankingRates, MarketWatch and more. You can find Kendal on Twitter @HassleFreeSaver.