To start off the new year with new goals, the first thing I want to talk about is mindful budgeting. If there’s one thing I learned in 2021, it’s that money doesn’t come fast enough for everything you want AND need. You have to focus on saving for when you need it and only spend on things you truly value — without the extra fluff.
While I start to practice it more and more this new year, I wanted to share with you my tips for mindful budgeting. You don’t always have to give up everything you love to save financially, but you do need to keep focus on where your money’s going and what it could do to benefit or hinder your future.
Here’s some tips I find useful when being mindful of my budget.
1. Track every expense you have
A few months ago, I had an amazing friend and mentor share a budgeting excel sheet that tracks everything I spend in a month. From utilities to rent and random purchases, it easily shows it all in one spot. And I HIGHLY suggest you find a method similar to see where your money is going every day, week, and year.
To do this, sit down every day or every other day to list out all your expenses. Track your morning coffee run, subscription costs, gifts you buy, and everything else in between. I recommend doing this on a spreadsheet so you can easily see how much you have left to spend for the month.
Once you have that nailed down, instead of thinking about the money you have left “to spend,” think about the money that’s left as “savings.” Every time you make a purchase, you see your savings contribution lessen and lessen — a feeling you may not love. At least for me and my friends, it deterred me from wanting to spend the money I had “left” as it felt I was taking out of my savings.
2. Have meetings with yourself and your budget
It can be hard to set time on your calendar just for your budget. But, it can help you make money moves. The more time you spend analyzing where your money goes, the more you’re aware of your financial situation — making each purchase more valuable.
A few months ago I would buy what I wanted. But I didn’t think about the bills coming in for beautiful Sadie girl, unexpected doctor bills, or facing the cost of moving apartments as my lease came to a close. These bills started to come at the same time, dwindling my savings.
To avoid that, I had meetings with myself every other day to track my spending, see how much I am truly able to afford while contributing what I needed to my savings account. I can’t explain how much this helped me. For instance, I thought I was spending roughly $200-250 on groceries and eating out each month rather than the whopping $400-450 it actually amounted to.
3. Think of each expense as your hourly earnings
This may take a little time to figure out if you’re on a salaried wage, but it truly helps. This last month I was figuring out how much I really make with taxes taken out of my paycheck — way less than what I thought it was.
I scooted over to Google where they have a tax calculator. I put in my salary, my state/city, and out came my income after taxes. Then I divided it by the 80 hours I work every pay period and out came my hourly wage.
When I look at purchases I want to make, I now think about how many hours a week it would cost me just for that one item. For instance, a new “comfy” winter sweater could cost me a full day of work and it may not be worth my time or money at that point. Try doing the same!
4. Avoid the *classic* impulse purchases
It’s easier said than done, I know. But, you need to avoid impulse purchases. If you’re in your mid to late twenties, you can probably think of a few things you bought and don’t use anymore, especially at a high price. I sure can name a few.
If you’re thinking about what your hourly wage is, and are aware of your money earnings/spending, you most likely already killed the urge to impulse buy before you do. But, if you’re still struggling, give it some time to think through. You may want to buy a new iPad now, but in a month, that may be old news.
Along with that, ask yourself the tough questions. Do you really need a new iPad if you spend most of your time on the computer and phone? Would buying an iPad impact your day-to-day life positively? What would you actually use it for and how do those actions benefit you? If you still have the urge and financial bandwidth to buy an unnecessary item after a few months, maybe it is time to treat yourself.
5. Keep your future self in mind
Again, you may want to go on a shopping spree right now, but would your future self care? A few years may pass and you can’t stop wondering why you spent $300 on a dress that’s shoved in the back of your closet instead of investing it into retirement.
To avoid impulse purchases, and purchases that you may have convinced yourself that you “needed,” think about your future self. For example, I end up wearing the same outfits every week because they’re more comfortable than the fashionable and expensive clothes I buy. Why get more if I know I won’t want to wear them day after day?
Instead, I could invest money into my Roth IRA or 401k to ensure I live comfortably after my career has come to an end. Or, I could contribute more towards my savings to buy a house that I’ve always dreamt of having. Think about the things you want in the future and how your current purchases could impact that.
6. For things you still need or want, invest in them
Like I said, I normally wear the same 10 outfits week-after-week. I don’t normally choose jeans over leggings or sweats or button-up shirt over my my comfy pullovers. Instead of buying a thousand pairs of “fashionable” and “trendy” jeans, I buy one pair that will last years and is comfortable.
You don’t always need to have a new car, new phone, new clothes, shoes, apartment, etc. Instead, invest in one or two areas that hold the most value for you. In my position, that is my dog. She’s a 15-year-old cocker spaniel that requires more than normal medical attention and monthly medication. I choose to invest in my baby girl vs going out every weekend for food and drinks.
For you, you may choose to invest in health and fitness vs going out each weekend. Or, maybe you love fashion and you want to invest in fashion vs health and wellness products and services. To each their own, but don’t invest in everything but your savings.
How I practice mindful budgeting each day
I have listed many examples, but I thought I would go into more depth on how I achieve mindful budgeting. Even though I am not perfect at this yet, I would say I have come a long way. These are a few things I do to make sure I am practicing my mindful budgeting goal.
Make it hard to make online purchases
To make impulse online purchases hard, I deleted my saved cards on all my favorite websites. Oddly enough, I will abandon my shopping cart before I get out of bed to figure out my card’s number, expiration date, or security code.
Think about what’s valuable
Buying a new coffee machine for $1,000 isn’t as comforting as putting $1,000 into savings. If my car breaks down, I have to move, or my dog needs some extra care, I have the money to support it. If I properly set aside some savings for that coffee machine over the next few months and still want it, then I may consider splurging.
Invest time in valuable areas
I would say shopping can and could be a hobby. You get serotonin off getting new things you love and getting to use them for a few weeks, or months, for the first time. But, overtime, that feeling may wear off and you’re ready to make the next purchase to boost serotonin levels. Instead, invest your “shopping time” into more valuable projects — like creating a website.
Focus on what you do have vs don’t
Sometimes it can be hard to cut spending in areas that you love to, but don’t need to, spend. To shift your focus, think about the things you do have vs don’t. For example, I may want a new $1,600 phone, but I already have a well-working phone in my hand that’s paid off. Or, I may want new clothes, but I have a full closet of amazing clothes that I don’t wear enough.
Savings vs spending and being mindful with your money is easier said than done, but it is so worth it. Instead of stressing about your finances, you’re confident in where your money is going AND it makes each purchase that much more valuable for you. You may find going out once every two weeks for food can be more rewarding than going out a couple times a week if you’re avoiding your credit card statement like the plague. Happy saving!