Do you ever wonder where all your money goes at the end of each month? You’re not alone. It’s easier than ever to spend money, whether online, a tap of Apple Pay, or with a credit card. It’s SO easy to buy something without really pausing to think about it. We live in a capitalist society where consumerism is expected. It’s virtually impossible to avoid marketing.
When trying to pay off debt, or build wealth, the concept of intentional spending is a game-changer. This is the idea where you align your financial decisions with your core values, focusing on what brings you the most joy and fulfillment. Instead of feeling deprived by a budget, when you focus on intentional spending, you feel more empowered and satisfied, because you are spending on what is most important to you.
When paying off debt in my thirties, I adopted this kind of approach by reflecting on what was most important to me. Most essential was getting to be debt free where I could feel less anxiety and stress around money, so I was willing to cut back in several places. In fact, I had to in order to stop getting into more debt. I valued my time as a busy professional, so I allowed myself a cleaner for my apartment every three weeks. My family lives in the UK. Traveling to see them was important, so I spent money on flights. While I was back home visiting them, I occasionally took short 3–4-day trips to Europe, because travel is one of my core values. At the time, I was also an avid long-distance runner and triathlete, so I spent money on races and the essential equipment I needed for that. Exercise and the challenge of taking part in a race was so good for my mental and physical health, so this was something I prioritized. Since I live in Southern California, the weather is great year-round which means I can easily exercise outdoors, so I did not need to pay for any expensive gym memberships. In all these instances, I always tried to find the best deals and the best products I could afford without going overboard. In summary, my core values are mental and physical health, family, travel, and time.
As far as what I cut back on, I realized that, as an introvert, I didn’t mind cutting back on going out. I didn’t go out to dinner much, but instead had friends over, and we would cook together. I also cut back a lot on my alcohol consumption, which helped not only my bank balance, but also my health overall. By spending less on those two things, I also cut back on things like Ubers/taxis. Another area where I really trimmed down was clothes and shoes. I went back to basics and just bought what I really needed. I always tried to buy things on sale or with a discount was offering. I didn’t get sucked in to the marketing emails I received, but instead if I needed something new, I’d look at my email inbox to see whether there were any current offers. Whenever I bought something new, I kept the tags on for a couple of days and then looked at it again to see if it was something I really loved. If not, I returned it. I cut my cable, because I really wasn’t watching it that much and it had become so expensive.
This spending plan allowed me to feel empowered and not deprived. Though I was on a tight budget after all my debt payments each month, I felt liberated because I felt more in control of my finances but was still able to enjoy life.
Everyone has different core values, and so that’s why there is no one “right way” to spend – it is unique to everyone. There can be so many competing priorities, but once you sit down and assess what YOUR values and goals are (and no-one else’s), it becomes much easier to determine what you want to spend on.
It’s important to highlight that intentional spending isn’t about only spending on the “essentials.” You can and should buy things that are non-essential if you get true value from them, or they align with your goals. Being in control of your money, means knowing how to spend as well as save.
Why Intentional Spending Matters
When you are a busy professional, it is so easy to buy things for convenience: take out or dinners out, breakfast on the go. Making quick decisions on the fly to buy something, or even late-night Instagram scrolling can lead to impulse purchases. It’s important to remember to be conscious of every purchase you are making and check in to see whether it aligns with your values. You can even pause for a day or two to establish whether it’s really something you genuinely want.
It’s also easy to get caught up in spending for emotional reasons, or through family or social expectations. But that can lead to spending on items that don’t bring long term satisfaction. It’s easy to want to buy things because that’s the trend, or everyone is doing it, but I challenge you to think about whether this is going to be something you are happy you purchased in a couple of months. There is a societal trend to spend on expensive luxury accessories – purses, shoes, jewelry etc. It seems to have grown over the years, with celebrities on social media showcasing their luxury goods. These items can set you back several thousand dollars and may not really be aligning with your own goals, rather are you buying things to keep up with the Joneses or your friends? Have you heard the saying, “Do you want to look rich, or BE rich?” In Morgan Housel’s best-selling book, “The Psychology of Money”, he notes that there are many wealthy people who do not look wealthy, because they are not spending their money on trying to look wealthy. He states: “We can’t see people’s bank accounts or brokerage statements. So, we rely on outward appearances to gauge financial success… But the truth is wealth is what you don’t see… The world is filled with people who look modest but are actually wealthy and people who look rich who live at the razor’s edge of insolvency.” I highly recommend his book for a new way to think about wealth and money.
I’ve been there, spending on expensive things I could not really afford, buying things using a credit card and paying it off over years. A Gucci purse, Jimmy Choos, luxury cars, for example. I thought these things brough me joy, but really, I just bought them to try and look a certain way and hide the insecurity I was really feeling inside. I would spend mindlessly on breakfast or lunch every day at work, which probably set me back at least $300 a month, when I could have made it at home. When I reached the breaking point of feeling so anxious about money, I knew I had to change something. I looked at these things and realized they didn’t bring me joy. It was the friendships I had and experiences, such as travel or training for a triathlon, that really meant something.
How to Practice Intentional Spending
Step 1: Identify Your Core Values and Goals
Take some time to reflect and write down what you truly value. Is it travel, family time, security, freedom? It takes quiet time and self-reflection to really nail down these values. Once you have them you can set goals around these values, and this will guide your spending decisions.
Step 2: Audit Your Current Spending Habits
This might take a while, but it is a crucial step to determine where you might be able to change your spending habits. Look at the last 2-3 months of bank and credit card statements and write down all the things you have spent on to identify areas of unintentional spending. Are there things that you have purchased that you barely noticed or remember? Are there patterns of emotional spending (e.g., stress shopping)?
Step 3: Create a spending plan based on priorities
Now create a spending plan that allows for your essentials, like rent and bills, but also includes room for the non-essential items that align with your value and goals – those areas that bring joy and fulfilment in your life, while cutting back on less meaningful purchases. For example, if travel is a core value, allocate more to travel funds and less to impulsive buys of the latest trends.
Step 4: Practice mindful purchasing
A good strategy is to wait 24-48 hours on a non-essential purchase and decide after that time period whether this is something you still want to buy. Consider how it aligns with your values. It does take discipline and self-control, but try to avoid buying things for instant gratification.
Intentional spending vs traditional budgeting
Note that intentional spending is quite different to traditional budgeting. Traditional budgeting feels like a chore, restrictive and depriving yourself of joy. That form of budgeting is solely focused on cutting expenses and limiting spending.
However, when spending is aligned with what matters, it doesn’t feel like a constraint, but rather can feel liberating and empowering, knowing that you are pursuing your goals and, on the path to being financially secure.
I have found, like many others, that investing in experiences vs material things tends to bring more joy. Travel or family activities create lasting memories that are priceless when compared to material goods where the feeling of enjoyment may only be fleeting.
It’s also a great idea to purchase quality items vs constantly buying cheap, less durable items. It’s better for your wallet in the long run as well as for the environment as it leads to less waste.
You can also set spending boundaries such as avoiding the temptation of sales just because there is an offer. Unsubscribe from marketing emails, so you can avoid being tempted.
Avoid falling back into old habits
It’s so easy to fall back into old spending habits. Especially during stressful or busy times. To avoid that, it’s a great practice to do a monthly financial check-in, where you review your spending from the prior month and make any adjustments. That’s also a good time to check in with your progress towards your goals – whether it’s paying down debt, saving for a large purchase or investment goals. Seeing the progress you are making can be extremely motivating.
The benefits of intentional spending
“The only way to be wealthy is to not spend the money that you do have.” Morgan Housel.
I’m not advocating for not spending anything on things that bring you joy, but by spending according to your values, you will stretch your money further, which allows you to pay off debt, invest and save. It gives you something priceless, which is greater financial freedom.
It is also likely to bring you more emotional satisfaction and less buyer’s remorse. Guilt can often creep in when buying something which doesn’t align with your values. Meaning you don’t enjoy that purchase anyway.
Intentional spending was the key to my financial success in paying off my debt and growing my assets. It is the single biggest contributor and continues to drive my financial decisions every day.
Start spending intentionally today!
Take one small step toward intentional spending today. Reflect on your most recent purchase and how it aligns with your values. Or do a spending audit of the last few months to find out where your money is going. Perhaps you could set one intentional spending goal for the month.
Controlling your expenses through intentional spending is a powerful tool to achieving financial independence and living a more fulfilling life. You can take a look at my FREE savings challenge here for some initial ideas of ways to practice mindful spending.