A very few of us are gifted with that inbuilt
radar which senses and decides if a particular expense is important or not. The
rest of us, however do not have it that easy!
And that is where conscious spending comes
The basic idea behind conscious spending is
to ditch the sentence, ‘I guess I spent that much’ every time your bills
and credit card payments arrive at your door step. Instead of
It involves planning ahead of time. And
instead of being reflexive with what you buy, you are conscious and smart.
As young people, most of us are not used to
spending consciously. We’re spending on whatever, whenever and then reactively
feeling good or bad about it.
The reaction and the thinking should
precede the buying action – and not the other way round.
First step towards conscious spending is
when you stop spending because you’re expected to. This is the kind of expenses
that which we buy – not because we want it or like it, but because everyone
else is buying it. In this case, you buy as reflexively. And that could be one
the biggest dangers you could impose on your financial life.
With conscious buying, you need to evaluate
each and every purchase that you make. Do you really need the product or
service in your life, or are you simply doing it out of peer pressure? What
changes does this purchase bring about in your financial wealth? Are you
making an active, conscious decision to spend this money? Are you certain that you
are deriving value from the expense?
So, does conscious spending mean you live
the life of a miser and not live a happy life off what you earn?
In fact it does the exact opposite.
Let me explain with an example. Imagine
that Tanya is a girl who loves books. It is okay for Tanya to spend ten
thousand rupees on a hardback collection of the Harry Potter series – because
Tanya wants it and she gets value out of the money spent on the collection. So,
that ten thousand bucks that Tanya spent on books - It is conscious spending.
However, trouble begins when Tanya spends
the same ten thousand bucks on an expensive brand of sports shoes when she
hardly ever steps out of her house! Tanya did not put thought into the value
she gets out of those costly shoes she’s never going to use.
Conscious spending is when you think the
about the value that you get out of a product.
Conscious spending is when you set aside
fund, save for your children’s college education, invest in insurances 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.