Wealth is not built through not spending, but rather investing in the right – the worthwhile – things, and maintaining wealth is less about affordability and more about the return value and benefit of a purchase or investment. This is the key difference between mindful and meaningless spending, and we’re here to discuss ways in which you can maintain financial discipline and practice mindful spending to maximise your long-term wealth.
What is mindful spending?
Mindful spending is about making meaningful financial decisions that add value to your life instead of thoughtless impulse buys. While we all make mistakes here and there and sometimes buy things we regret or no longer need, mindfully assessing our purchases based on their long-term value is the key difference and one that can enhance financial success.
This technique can help us stay in control of our finances and understand what truly matters to us when we spend money. By making wise financial choices and establishing meaning behind what we buy, we can contribute to a sustainable, wealthy lifestyle.
What are the benefits of mindful spending?
The benefits of mindful spending go beyond just your finances. Not only can this habit help boost your savings, but it can also enhance other areas of your life by regularly practicing the habit of buying better and buying right. Here are some of the top benefits of mindful spending:
· Increase your savings
· Buy better quality products for the long-term
· Boost your feeling of abundance
· A sense of control and stability
· Give your expenses intention and meaning
· Enhance future financial security
The ability to make conscious spending decisions as opposed to impulse purchases and understand the value that your spending brings to your personal and professional life can help maintain a sense of control and confidence. Long-term, this security can significantly benefit your financial goals, keeping your wealth-building efforts on track.
The mental benefits of mindful spending
Making conscious financial choices can free your life and mind of clutter, which is a powerful wealth-building strategy. Investing in things that matter means that you focus on the essentials and prioritise the things that are valuable to you, replace any physical, mental, or emotional stress with meaningful experiences, and live a full, resilient, successful life.
Mindful spending for the long term
Staying wealthy doesn’t mean never spending any money, but it’s important to pay attention to where and how that money is spent. After all, you should enjoy the success that you’ve worked so hard to build, and this is where mindful spending can help.
It is a regular habit that should be implemented in the long term. It requires skill, discipline, and dedication, but once you master it, it becomes effortless to maintain financial health and freedom. Long-term mindful spending can empower your wealth-building plans by making sure that your money decisions are positively driven and influence a life of abundance – unrestricted and fulfilled.
How to practice mindful spending
Before making a spending decision, the main question is: do I need it? Consider the potential benefits of your next purchase and how it might improve your life. These benefits don’t need to be large-scale; they can be as simple as bringing you joy or allowing you to spend quality time with your family. The key point is that your spending decisions should be intentional and add value.
Here are a few ways in which you can practice mindful spending:
· Consider your values
Use your values as a guide to make meaningful spending decisions. This can be anything from a healthy lifestyle to charity work or family time – connect your priorities with how you spend money to add value and maintain your financial goals.
· Be proactive
When making spending decisions, a proactive approach can help you keep your financial health on track. With each purchase, consider how it might affect other areas of your life such as your business, investments, or savings. Checking these regularly and making sure that they continue to align with your goals can add a vital sense of stability and control.
· Plan ahead
You’re likely to have future events marked in your diary – whether it’s a family holiday, a wedding, or going out for a meal, look ahead to recognise upcoming expenses and allow yourself to prepare in advance.
· Designate guilt-free spending money
Further to the above, it’s useful to have a designated pot for personal spending. Once your necessities have been covered (bills, mortgage etc.), you can dedicate a portion of your income to wants (eating out, entertainment, holidays). The 50/30/20 rule of spending can help with the management of splitting your expenses appropriately.
· Think before buying
Giving your purchases some thought is the key difference between mindful and impulsive spending. Before committing, ask yourself the following questions:
- Do I need it?
- Will it impact my life in a positive way?
- How long will it take to earn the money back?
- Can the money be put to better use elsewhere?
This is a simple exercise that can help you understand the intention behind a significant purchase. If you answer yes to all/most of these questions then it’s a worthwhile purchase, otherwise, you may realise you don’t need it.
· Understand your triggers
Tracking your previous impulse buys can be a helpful way of understanding your motivations when faced with a spending decision. Try looking back at any unplanned expenses and what thoughts or feelings convinced you to buy. This can help you get an idea of what to avoid in the future to prevent unnecessary spending. However, don’t be hard on yourself – spontaneous and “fun” purchases are okay if you set appropriate limitations and budgets that suit your lifestyle and financial goals.
· Stay in touch with your advisors
Your wealth management team is there to keep your finances on track. Let them know about a big purchase that you’re considering and discuss its potential impact before committing. This can give you peace of mind that your decision is justified and meaningful.
Mindful spending is a form of minimalistic living – a thought process that means you distinguish between needs and wants and analyse how your financial decisions benefit your life.
Some tips for practicing mindful spending include noting your values, being proactive, planning ahead, designating a guilt-free money pot, thinking before you buy, determining your triggers, and staying in touch with your financial teams.
While mindful spending promotes living within your means and making valuable choices, occasional fun purchases that bring you joy are absolutely fine as long as they don’t replace the habit of mindful spending.
The aim of mindful spending is simply to be proactive about your finances and apply meaning to your spending decisions, which can be an inspiring way to alleviate stress and save money.
For more helpful tips and inspiration on personal development and wealth-building, visit the Propiteer Capital blog.