By now, you’ve probably heard about the benefits of being intentional with your money. But what does intentional spending really mean? If you’re like most people, you tend to put off thinking about financial matters until an emergency pops up or something needs to be purchased. With inflation rates currently skyrocketing through the roof all over the world, now’s a good time to stop waiting for an emergency and start being more intentional about where your money is going.
Entrepreneur Jim Collins says “your most important job is to figure out how to get paid.” I’d go beyond the obviousness of income to say your most important job is to figure out how to live on less than what you earn.
It sounds intimidating, but it’s feasible if you look at things holistically and start with baby steps. First though, you need to know what it means to be intentional with your money.
Being intentional when you break out your wallet means being aware of where your money is going, and putting it towards things you value. How many times have you gotten your monthly credit card statement and wondered, “when the heck did I buy all this stuff?” You can change that! In this post, let’s look at how you can be more intentional with your money and get a firm grasp of where it’s going.
Intentional Spending Definition
Making intentional purchases is a mindful and purposeful way of using yourmoney. It means being aware of your spending habits and making choicesthat align not only with your personal means, but with your values and goals.
For example, if you value health and fitness, you might choose to spend moreon healthy food and activities which support your health. Or, if travel and happenings are important to you, you might choose to spend more onexperiences that will create lasting memories.
Thereare different takes on how to be intentional with your spending. One is tocreate a budget that reflects your values and goals. This can help yousee where your money is going so you can make better choices. First though, you need to know what your intention is, and what you truly value.
Know Your Intention & What You Value
Intentionis the determination to act a certain way. With deliberation andpurpose. To manage your spending and finances intentionally, focus onyour goal. It might be something very specific, such as wanting to saveup for a wedding, a new home, or to simply build a nest egg for earlyretirement.
Or maybe it’s far morecomplicated in that you’re not aiming to save up for anything in particular. Perhaps you simply have the feeling that something isoff every month when the bills start flattering in. Or maybe you’ve beenliving beyond your means and you want to turn your finances around. Payoff credit card debt or a student loan.
In either case, take a step back and thinkabout your particular situation and what you’re unhappy with. About hat’s important to you, what you truly value, and what you are not willing to sacrifice.
Once you reallyunderstand why you want to change your spending habits and what’s important to you, you’ll have the focus it takes for intentionalspending.
Intentionally Budgeting to Save Money Is Your #1 Financial Tool
Once you understandyour intent, your next step is to set up a budget. This will be your most powerful tool to become more intentional with yourspending. Having a budget will help you paint a clearer picture of yourfinancial situation and make better decisions about what to allocateyour hard-earned resources to.
Think of your budget as a toolwhich allows you to track your income and expenses so that you can makeinformed decisions about how to best use your money. Another benefit to having a budget is that makes it easier to identify areas in which you may be spending more than you need to, or where you could cut back inorder to save money.
A budget can be as simple or complex as youneed it to be for your particular case. At its most basic, it should include all of yourregular income and expenses. This can be done by tracking your spending in something a simple as a spreadsheet, or directly in your notes app.
Thereis also some great personal finance and budgeting software out there. As an Apple user, I personally love Banktivity and can recommend itafter having had used it for over a decade now. For Windows users,Quicken is very popular. If you’d like a browser-based app, Mint has afree plan. Forbes did a full review of Mint recently, whichyou can find here.
How to Be Intentionally Mindful in Your Spending Habits
Ok,so now you know your intention and you’ve gotten a clear idea of your financial situation by setting up a budget to track income andexpenditures. How do you actually do intentional spending now though?
To be intentional about your purchases, you need to take the following steps:
Understand your spending patterns. Track your expenditures for an entire month tosee where your money is going. Much like going low-buy, this expensetracking will allow you to clearly see where you can cut back.
Makea plan. Once you know where you can cut back, make a plan for how youwill do so. Are you spending hundreds every month eating out and getting takeaway? You might consider setting yourself a spending limit anddoing some meal planning at the weekends so you can cook for yourself. Comb through your subscriptions, fashion purchases and everything else that is non-existential toidentify your weak spots. Then set yourself some rules you will stick to.
Be mindful of your choices. When you are making a purchase, ask yourself if it is something you really need. If not, consider whether there is a cheaper or alternative option that would work just as well. Or, if youcould borrow the item.
In previous posts frommy Low Buy series, I’ve covered lots of examples and different ways you can trimback various categories of spending.
Reduce Your Expenses, But Don’t Give Up Everything You Love
Intentionalspending is not about punishing yourself. If you know you can’t live without yourHelloFresh food delivery subscription or your posh gym membership, you’re not going to be a happy camper ifyou cut these expenditures. In fact, giving up the things you love couldvery well set you up for failure.
What you want to do instead is take a hard look at all the stuff you could do without.Maybe you don’t need to drive the car to work everyday given the current costof petrol; perhaps you could get a bike or take the train. Or perhapsyou could give up your regular splurges at Sephora and start usingthe makeup you’ve already accumulated. After all, makeup hasexpiry dates. Use it or lose it, as they say.
In essence: intentionalspending is about thinking through each purchase you make. I always saythere are a few questions you should ask yourself before pulling out your wallet:
- Will this make my life better or help me solve a problem?
- Am I going to use this within the next few days?
- How many hours do I have to work to pay for this?
- Will this make me a better person?
- How many different ways can I use this item?
Youdon’t have to give up cute things or going out with your friends. Youjust need to pay attention to what you buy and why you buy it.
The Positive Impact of Intentional Spending
Thereis a lot of research that has been conducted on the topic of spendingand how it affects the way we think about money. The general consensusis that mindful spending can have a positive impact on our financialmindset.
When we are intentional with our spending, we are morelikely to be mindful of our overall financial situation. This can helpus become more responsible and make better decisions when it comes toour purchasing power as consumers. Additionally, conscious spending helps us develop an overall healthier relationship with money.
People whoare intentional with their spending habits are more likely to savemoney, have less debt, and feel more financially secure. Additionally, they are also more likely to feel happier and less stressed about money. Or use money to deal with stress.
Don’t Lose Track of Your Intention
Intentional spending is about taking control of your finances and making sure thatyou are only buying the things that bring you joy and get you closer to your goals. It can ultimately help you live a richer life whilst saving you money.
Sokeep your goals in your mind’s eye. Even if you are planning toinvest in something long term like buying a condo, if you have that goal always in mind, you’ll be more likely to find ways to save moneyeach month. It will also be easier to prevent yourself from buying things that aren’t relevant to your goal.
Focus your spending on things that are personally valuable to you. Today, with both inflation and the rise of after-buy consumer payment options luring peopleinto a spiral of debt, the significance of being deliberate with ourpurchases is huge. If you’re not happy with your current financial situation, it’s time to get intentional about your spending.
There are a lot of ways to save money, but you need to find what works best for you.You might need to make some sacrifices in the short to middle term, butit can really be worth it in the long run. Be patient and stay focused onyour intention and goals, and you’ll develop a new attitude towardsmoney with staying power.
