Budgets can be very motivating when you think you are making changes that will increase cash flow immediately however, in the times we are in when inflation is so high, real life intercedes and forces us to abandon the budget. In addition, a lot of us are prone to the trend of spending on reflex, making impulse purchases or spending to have what other people have.
However, even with not being able to stick to our budgets, we still can reach our desired financial goals if we are able to practice conscious spending. But with conscious spending, you evaluate every purchase. By asking yourself:
1. Will buying this help me meet my goals?
2. Will it make me happier?
3. Is it congruent with who I am and what I want to do?
These questions can have a powerful positive effect on how you spend and save.
The idea of conscious spending is to look back on your past purchases and what you are currently spending your money on to figure out what expense is valuable to you and you prioritize on such expenses and cut out the excess spending that does not add any value to your life. Conscious spending basically means that you are choosing what you are going to spend money on. Here are a few tips on how to make the conscious spending work for you.
Track all your cash out flow; this is a simple budget which will give more awareness on how you are spending and help you cut back on the non valuable spending. On way to achieve this is by tracking your daily spending habits using a Daily expenses diary. For example, if on a daily basis you have budgeted for a cup of coffee for Kshs. 120, at the end of the month, you will have spent Kshs.3,600 and at the end of the year Kshs.43,200. The amount spent on a daily basis may often fall into the miscellaneous category of our budget but if written down it will help you see how much you could saving and how fast you can achieve your financial freedom if you can cut back on non essentials.
Decide Perceived Value:
Most people have a built-in barometer that tells us when we hit the overspending bench mark. Perceived value is your gut or instinctive number which is subjective for each individual. Before making a purchase, make sure you have sort out the cheapest price you can get for it and at the same time asked yourself if you really need the item, you can use something else in place of it. This is where the intuition of the distinction between want and need will come in. In addition avoiding impulse buying will go a long way. As a rule of thumb, after identifying an expense you want to incur on impulse, take more than a day before making the purchase to evaluate your financial situation at the particular time and to decide whether you really need to go out of your budget on the purchase.
The goal of conscious spending is not restrictive, but instead helps us increase awareness about how we are behaving in everyday life. It lets you cut back on the things that aren’t important to you so that you can spend on the things that do matter. Learning to practice conscious spending is a sure way to improve your quality of life and a sure way you can achieve all of your investment and saving goals and you can live a debt free life. The key is to be completely conscious about what those things are.