The idea of “Mindful Spending” came to me today. I have never heard this term before, but it made perfect sense. I want to share with you what it means to me and how you can benefit:
Here’s the simple truth – You need to figure out what you really want, eliminate expenses that don’t bring you joy, set realistic goals and create an achievable plan to get you there.
The money that you generate is for you, your family, your future and hopefully for sharing with others. We live in a society that is SO consumer-driven; it can be easy to fall into the trap of spending too much at expensive restaurants, buying a new car, luxury clothing items, a $6 coffee out the door and the list goes on. But here’s the secret…unless this “stuff” TRULY brings long-term happiness to you, don’t spend your money on them!
Understanding what you value is…invaluable
At the end of the day, the question to ask yourself is…Do my ongoing expenses bring me the thrill they once did? This concept is not about depriving yourself of spending; it’s about adjusting your spending habits to mirror your values by spending on experiences, products, and services that TRULY matter to you.
How To Find Out What Matters – Here is an Easy Exercise:
#1 Write down all your ongoing expenditures and frequently purchased items
#2 Total up these expenditures (a monthly total). How much do these cost you every month?
#3 On a scale from 1 to 10, add up how much value and/or happiness these bring to you. (1 = almost none and 10 = tremendous satisfaction)
#4 Now consider your Financial Freedom. What would you do with your TIME if you had complete Financial Freedom? If you already have Financial Freedom, what could you do for others? What else could you give?
#5 Now decide what you would rather have. The joy from the expenditures on your list or the feeling of knowing you have absolute Financial Freedom? Life is a balance; you don’t want to remove ALL the items on your list, you want to eliminate the expenses that are not serving you and your future goals.
#6 Write down at least 2 or 3 items that you could eliminate from your expenses. Add up what that savings would be annually. Now multiply the annual savings x 10 years. Last, multiply that number by 8%. This percentage represents a (potential) investment return (from stocks, real estate, etc) that you could have if you removed the non-essential expenses from your life.
Subscription TV Service = $75 month x 12 months = $900 a year
Car Payment (Fancy Pants Car) = $400 month x 12 months = $4,800 a year
($900 + $4,800 = $5,700) x 10 years = $57,000
$57,000 x 8% = $4,560 a year investment income (potential)
Mindful Spending Benefit = By eliminating a few items that do not bring long-lasting fulfillment and joy to your life (for a 10-year period) you could instead build up investment income toward your Financial Freedom goals. Which is more important? Your future, time, family, happiness and contribution, or having an excess of “stuff” in your life?
To Your Success
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.