As an outdoor and fitness enthusiast, I enjoy planting myself outside as much as possible, regardless of the season (Even when it’s -12 degrees during an Iowa winter). Sometimes there's a cost involved with this, such as fixing a bike, going on a kayaking trip, skiing lift tickets, or purchasing a new piece of fitness equipment such as a rower. Having recently started my business, I found myself being a bit more frugal around my own spending. But recognizing that it is okay to spend money on the things my wife and I enjoy and avoiding the scarcity mindset can be beneficial too.
Throughout our lives we are shown the idea of saving and its importance. This is a great starting framework to have, but we do need to keep in mind that in reality, we will spend the money that we save at some point. Regardless if you are just starting out or nearing retirement, shifting this paradigm around can be challenging as it involves going against the positively reinforced habit of saving. Creating a healthy mindset around spending and finding a ‘balance point’ is paramount in creating a solid money script and living a happy life.
A balance point is the sweet spot of monthly spending and saving. One of the first steps to creating a positive framework around spending habits is to understand your needs and wants. Expenditures such as travel, dining out and going to a baseball game often are classified as wants so people may choose to not spend money on them. However they are also important as they provide enjoyment and create memories which are invaluable. It can be easy, especially if you are very frugal, to feel guilty and worry about spending but a balance point will give you the flexibility to save what you need for the future and enjoy your earnings now.
Understanding Impulse Buying
Saving and spending should align with your overall goals, but recognizing impulse buying is also important. A good tip I personally follow is when I feel the need to make a splurge purchase, I write down what I want to buy and how I feel, and wait 24 hours. I revisit this the next day and see how I feel about that purchase.
Many times, the urge to impulse buy may be due to feeling stressed, and by the next day, or even a few hours later, you no longer feel the need to buy it. Taking that moment to rationalize why you want to make the purchase will save you money in the long run. If after waiting you still want to make the purchase, allow yourself the freedom to buy it, if it fits in the budget, without guilt.
Working with a planner to help find your balance point
While a traditional financial advisor can help you create a solid savings and investment plan, a good financial planner can take it to the next level by helping you create a good mindset around spending. They will guide you in finding the balance between spending and saving, so that you don’t over-save or under-save. They can help you feel like you are in control of your finances instead of your finances being in control of you.
Creating a positive framework around your spending habits is crucial to achieving financial wellness and happiness. Remember, the key to creating a positive framework around your spending habits is to be mindful and intentional about your spending and to make informed decisions based on your financial goals and priorities. Lastly, recognizing preconceived notions about spending is important in decreasing stress, and allowing yourself to spend mindfully, regardless of where you are at in your life journey.