5 Ways to Stop Wasting Your Hard-Earned Income [Money Mindfulness]Reading Time: 2 minutes
As I covered in my “Money Mindfulness” post, we are often quick to spend our hard-earned income on things that bring us little to no value. In fact, we do it all the time, usually without thinking – hence, our need for money mindfulness.
We’ve all made purchases that, with a little hindsight, we realized were a big mistake. And we’d all like to have that money back if we could. So, it’s time to get proactive.
Five ways you can become more mindful of your money
Here are five ways you can make better decisions with your money and become more mindful of your spending:
1. Track Every Dollar
Use an app like EveryDollar or create your own budgeting document to track every dollar you spend monthly. Be diligent about reporting. We spend our money in a variety of ways (cash, credit/debit cards, mobile payment services) for a variety of purposes (food, entertainment, clothing). It helps to see all your outgoing money laid out in front of you in one place.
2. Spending Review
In addition to tracking every dollar moving forward, it’s also helpful to analyze your spending habits in the past. Review your spending each month for the last 12 months and determine which purchases you would consider smart and which ones you regret. Think about each expense and decide if it truly provided value or if that money could have been spent on something more important.
3. Live Below Your Means
If possible, live off 50 percent of your take-home pay for three months or more. This will force you to think more consciously about your money and require you to make more difficult spending decisions than you would typically face. Through this process, you’ll understand more clearly what purchases are important to you and which ones you can stop making.
4. Experiences vs. Material Things
Research shows experiences such as vacations, going to concerts and attending fun social gatherings benefit our wellbeing much more, and in more ways, than possessing material things. The enjoyment we receive from our material possessions tends to fade much quicker than the appreciation we have for our experiences. Make a conscious effort to allocate less money for material items and more on experiences that offer lasting memories.
5. Social Situation
Yale University’s popular “The Science of Well-Being” course teaches us that our situation, the environment around us, has a big impact on our decision-making. For example, having fruit out on our kitchen counters instead of candy can lead to healthier eating habits because our decision-making tends to adapt based on what is around us. There is a reason U.S. companies spend more than $150 billion each year to place ads prominently in front of us, advertising works. The number one job of a marketing ad is to convince us to hand over our money to the featured company. What ads and marketing techniques turn you into a victim of unnecessary purchases? When possible, remove yourself from social media groups, apps, text messages, email lists and any other marketing social situations that convince you to buy products or services that your rational mind knows you don’t need.
Have you had success with one of these mindful money tips? What other strategies have you used to be more mindful of your spending? Leave a comment below.