Is a budget contrary to luxurious spending?
The idea of a conscious spending plan accounts for budgetary restrictions and our needs for “living in the moment”.
In effect, by name, a conscious spending plan just sounds like a long way to say “budget”.
In a way, the two are the same. But while the results are similar, the path to get to an adequate level of spending vs saving is the opposite.
What is a conscious spending plan?
A conscious spending plan is a flexible approach to personal finances that is meant to enable you to indulge yourself in the ways that count.
Unlike some strict budgeting techniques, conscious spending doesn’t require you to enter into austerity. Instead, it requires you to balance out your spending on the wants and needs that count.
A conscious spending plan calls for you to look forward instead of backward.
You don’t account for your past spending and try to “correct” habits that you can’t continue. Instead, the idea is that you give yourself the freedom to spend extravagantly on the things you love and/or need. Then, you are required to cut other expenses aggressively.
Take the example of necessities in your life; whether they be wants or needs.
An example of conscious spending in action would be spending more on the one or two hobbies that bring light to your life.
Then, you would have to cut out some other spending on things you like, but don’t love, and want, but don’t need. For example, if you buy expensive lattes, you would cut them out of your life and redirect that money to those hobbies that we mentioned before.
The idea is to actually free yourself to splurge, without guilt, on the expenses that lead to your happiness, even if it would normally cause you to feel guilty to do so.
Then, you can save aggressively in other areas, forcing you to be highly conscious in general, while being free to direct your budget to what makes you happy.
Similar principles
A conscious spending plan does not negate most of the important aspects of budgeting.
For example, it doesn’t call for you to forgo the best use of your income. For example, the 50/30/20 rule, or whatever variation you use, is still important. You still need to allocate a set portion of your income to saving, and some to investment accounts.
Similarly, a conscious spending plan should not mean forgoing other important financial goals, such as setting up an emergency fund. Also, like budgeting, a conscious spending plan calls for you to re-wire the connection between your brain and the hand that reaches into your wallet.
Why is it important for you to be conscious with your budget?
Consciousness is crucial to all of the most important aspects of your life.
Without it, you can easily misdirect your time and energy. The same is true of your finances, which are limited, but play a major part in all of your life decisions.
Budgeting decisions shouldn’t be purely “logical”. Everyone who can afford anything beyond the basic necessities of life will naturally want to spend on something that makes them happy.
The process of building a conscious spending plan naturally tackles the problem of unconscious spending.
Unconscious spending often includes things we don’t need or even truly want. So, conscious spending plans simply put you in a position where you understand each transaction you make. Each dollar goes towards survival, personal development, happiness, and other important things.
You address your fixed and unfixed expenses with consciousness. You are forced to put a price tag on not only your necessary and fixed expenses but everything.
What does money consciousness mean?
Money consciousness boils down to a practiced ability to distinguish between different types of spending.
You can classify your wants and needs. Then, among the wants in your life, you can distinguish between those that provide a deeper value to your life and those that don’t. Lastly, conscious spending means rooting out bad habits… consciously.
The effects of money consciousness are positive across the board. Some austerity is always called for unless you make enough money to not have to be conscious.
Everyone has “wants” and ignoring (or trying to ignore) that fact is not likely to produce the ultimate result that everyone is looking for.
In terms of spending, think of values.
For example, imagine that you greatly value your morning cup of coffee.
- Do you really value the expensive coffee from the coffee shop?
- Is it so important to your life that it cannot be substituted for instant coffee or complimentary coffee served at your workplace?
Or perhaps you can come up with a plan where you rotate between the two. The value comparison here would be the energy you need/want to get through the day against the taste/luxury of your coffee.
You can think in such ways when it comes to many necessities, including transportation. But it’s the “wants” that naturally require the majority of your conscious thinking.
Conclusions
Conscious spending plans account for the many variables in both your financial life and your broader emotional needs.
Everyone has many desires that cost money but would not be considered necessities in life.
Some level of consciousness is needed in almost everyone’s life, as most people don’t have enough income and/or wealth to always spend on a whim.
But with conscious planning, you can leave some room for pleasure while picking the kind of fights with yourself that you are willing to fight and that will lead to a positive financial result.