Conscious Spending Sets You Free

Not all spending is bad. When your spending truly reflects your goals, values, and priorities, it can lead to a more fulfilling life.

  • Share
  • Read Later
Getty Images

My friends are appalled when they hear I spend $200 a month for my gym membership. “I thought you were supposed to be the King of Frugal,” one guy said to me the other day. Not really. I’m more like the King of Conscious Spending.

Sometimes people forget that it’s actually okay to spend the money they earn. Sure, you should set aside an emergency fund, save for your children’s college education, and sock away money for retirement. But after you’re done doing these things, the money you have left over is yours to improve your quality of life.

The heart of frugality is choosing to spend it on the things that are important to you while cutting back ruthlessly on the things that aren’t. Ramit Sethi calls this conscious spending, which is a fantastic way to describe it. Conscious spending implies that you’re actively choosing to spend on some things and not on others.
[time-link title=”(What do other personal finance experts actually splurge on?)” url=]

Contrast this with how most people spend. (And, in truth, how even financially savvy folks spend a lot of their money.) We tend to spend on reflex. We buy things because we’re expected to, because everyone else does. We spend to have what other people have. We sign up for gym memberships that we never use, subscribe to magazines we never read, and pay for golf clubs that get buried in the garage. We make impulse purchases at the grocery store — or even on large items, like computers and cars. Most of the time, people spend without thinking.

But with conscious spending, you evaluate every purchase. You ask yourself: “Will buying this help me meet my goals? Will it make me happier? Is it congruent with who I am and what I want to do?” I know this sounds like New Age mumbo-jumbo, but it’s not. These questions can have a powerful positive effect on how you spend and save.

For instance, I’m willing to spend $200 a month for my gym membership because it’s helped me lose nearly 50 pounds in the past 18 months. I’ve made an active, conscious decision to spend this money, and I’ve made certain that I’m deriving value from the expense. That $3,600 is worth it to me. In exchange, I’ve given up cable television, I buy a lot of my clothes at thrift stores, and I often walk or bike instead of drive.

Conscious spending isn’t restrictive; it’s liberating. 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.