How to find JOY with money

Money. Joy. What? How’s this possible?

Get conscious of how, when, and why you spend money.?It’s as simple as that.?

What is Conscious Spending?

Most of the time, many of us spend without thinking.

Conscious spending is the process of?actively?deciding what you are going to spend your money on.?Having this clarity will lead you to use your money more effectively and enjoyably. Every dollar you earn will have a purpose.?People who practice conscious spending deliberately allocate money to what truly makes them happy, and cut costs in other areas, without feeling deprived or any other negative ‘budget-related’ emotions.

How Do You Apply Conscious Spending?

Follow these simple steps:

1.?Get transparency over your spending - examine where your money is going

2. Explore what really makes you happy

3. Cut down (or out) the things you don’t care about

4. Automate your cashflow

Let's break each step down .......

Step 1 – Look At Where Your Money Is Going

Schedule 1-2 hours to sit down and examine where your money is going.?

You can do this by looking through your past 6 months of spending via your bank accounts.?This can be quickly achieved by downloading the transaction history from your online bank statements.?Most banks have the function to put the data into a spreadsheet.?Once you have this data, filter the amounts and put each item into a category. For example, you can use the following categories:

Groceries??????????????Home??

Motor Vehicle?????? Kids/ Pets??????

Utilities???????? Insurance

Entertainment?? Debt repayment

Then examine how much you spend in each category and express it as a percentage if you can.?You could determine that you are spending 40% on groceries and then ask yourself ‘is this what I value ?’, or you may discover you're spending too much on entertainment, takeaway, or insurance.

Having this information will help you make informed decisions about your future spending.

When we spend money on one thing, it’s money we cannot spend on something else, either now or in the future.??Ask yourself ‘If I keep spending money in this category, where am I not going to be able to spend money, and can I live with the long-term consequences of continuing this for the next 1, 3 or 5-10 years?’

The more you understand about your money and where it flows, the more you’ll know what your options are.?

Step 2 – Know What Makes You Really Happy

Sit down and think about your top 5 values.?It might take a while, but it’s worth getting right.?To help get started, have a look at a Values list (Google one online and use that). Circle all the ones that resonate with you, then go back and reduce your list to just 5 values.

For example, mine are – connection, health, financial freedom, achievement, and fun.

Now you are aware of the things that are most important to you, give yourself permission to spend a set amount of money on these areas. This is where you’ll get the most enjoyment from spending money.

I believe knowing your values are SO important when it comes to money.?

If you’d like to deep-dive into understanding your values, book a 1 hr 'values elicitation' session with me, it will bring you a deep level of clarity around what truly matters, and where you're selling yourself short on a daily basis.

Step 3 – Cut Down (or Out) The Things You Don’t Care About

Where are you spending money that you don’t get joy from??phone, electricity, internet, insurance, or bank fees.?Whatever they are for you, these are the areas to focus on.

Can you negotiate better rates and free up some additional cash flow that won’t affect your lifestyle? Where are you leaving money on the table??

You may discover that from Step 1, you spend a lot of money on takeaway food, however, it isn’t something you value.?To manage your money effectively, this is where you cut or reduce spending and allocate it to savings and something aligned with your values instead.

By regularly spending money in accordance with your values and priorities, you’ll be less likely to waste money on frivolous expenses.

Ask yourself these questions:

Can I get this cheaper elsewhere, or borrow it?

Do I need to buy it now, can I wait 1-6 months??

Why am I buying this? What will it give me?

Is there somewhere else I can direct this money, that will make me happier in the long term?

Step 4 - Automate Your Spending & Savings

Here’s a method for allocating your money.?It’s based on Elizabeth Warren’s ‘50/20/30’ model.?Divide your after-tax income into the following three buckets (or accounts):

50%??Needs??-these are the necessary costs for you to live, those bills you absolutely must pay.?Think mortgage or rent, groceries, insurance, car, and utilities.?They don’t include things like Netflix or eating out.

20%???Investments?- this is?the?most important category and the one you should be making a priority of paying first.?This money gets allocated to savings, financial goals over the 1-5 years as well as your retirement and Future You funds.?This is where you can also allocate additional mortgage repayments as it results in increasing your Net Worth financial position.

30%???Wants?– these are all the non-essential items you spend money on.?For example, TV show subscriptions, Spotify, handbags, shoes, eating out, and gym membership. It also includes spending on luxury essential items, so say for instance you rent a home which is more than basic, the difference between a minimum rent and the higher rent you pay, should be allocated to your ‘Want’ bucket.

All the little ‘extras’ where money often is spent unconsciously.?This is where you need to get smarter.?Examine where you spend this money and ask yourself, does this make me truly happy, or do I spend on auto-pilot.

Give yourself permission for guilt-free spending. Too many of us spend and then suffer from guilt. Consciously allocate a 'safe, guilt-free' amount each month to spend on yourself in the wants space.

How it effectively works: say you earn $5,000 per month after tax.?Here’s how you’d allocate it:

$2,500 for Needs

$1,000 for Investing

$1,500 to Wants

Once you’ve set these buckets or bank accounts, regularly check in online for the first few months to make sure it is working for you.?It may be that you need to review some of the areas where you are spending.?If 20% to Investments is too much for you at the moment, you might need to reduce it to 15% and top up Needs to 55%.?If this is the case, the other lever you can move is on the income side.?Think about how can you make more money, to ensure you’re putting away your 20% amount.

Summary

The goal of conscious spending isn’t to limit you, but to expand your awareness of the daily money patterns that have been holding you back.

When you examine your spending to get the most satisfaction from your money, you add more to life, rather than feeling like you’re taking it away.?

If you want some support to form new spending habits or re-frame your relationship with money, we should totally hang out for a few months.?Book a 15 min chat with me now, to find out how.