To truly live a fulfilling life, it’s important to spend on activities we’re passionate about without remorse.
This will not only help us to thrive, but also cultivates a healthier relationship with money.
Always set aside a certain percentage of your income to spend on things that give you joy.
However, despite best efforts, it’s easy to go over budget and end up in debt trap.
Mindful spending and budgeting will help you set your priorities right. Let’s see how to get there.
CATEGORISE YOUR EXPENSES
It’s human nature to want more things and to spend on impulse. We are not helped by the fact that technology is making it much easier to give in to such impulses.
So, begin by categorising your expenses as necessities, ‘nice-to-have’ and joy giving. We can’t avoid some of these expenses, but we can try and be cost-efficient.
For your necessities, make subtle changes that lead to better savings with little impact on your quality of life.
‘Nice-to-haves’ are usually for convenience. If you are in the early stages of getting your spending and debt in order, it’s better to restrict these spends.
The ‘joy-giving’ expenses can truly enrich your life. But in financially stressful situations, these can be cut temporarily. It can save you from getting into a debt trap. But don’t forget to protect these as much as possible – they are what make life worth living.
ALWAYS USE THE CONSCIOUS SPENDING FILTER
This spending filter empowers you to think mindfully about your purchases and help reach your financial goals without limiting yourself in the areas that matter to you.
Needs vs Wants
Prioritise your needs over wants, so you can allocate more effectively and avoid unnecessary expenses.
Asset creation vs Liability enhancement
Every significant spend should create an asset and not increase your liability.
Instant Gratification
Instant gratification is linked directly to impulse buying; such spends often lead to buyer’s remorse or guilt.
BUDGETING
Budgeting is the key to guilt-free spending. Spending without guilt is possible only with mindful budgeting. A budget is for your recurring, foreseeable and expected expenses.
Allocate 20-35 per cent of your income towards guilt-free spends. Placing this in an envelope every week or month, rather than doing mental accounting, can help. But remember, prioritise your essentials and debt/investment commitments before earmarking funds for your guilt-free spends.
Build a well-rounded approach towards spending and budgeting. This will empower you to take control of your finances!
This article is for general information purposes only and while the information in it is believed to be reliable, it has not been independently verified by us. You are advised to exercise your own independent judgement with the contents in this article. – Standard Chartered Bank
