By Daniel Rodriguez | Dr. Budgets
With Thanksgiving Day behind us and the holiday season upon us, I thought this would be a good time to write about how to spend with intention. Thanksgiving Day is a wonderful day for me to think about what I’m grateful for in my life… when I spend time thinking about what I’m grateful for, I feel really good. And for me, that is the first step on how to spend with intention. If I am grateful for what I have, then I want less, and if I want less, I can focus on spending my money on what is truly important to me.
Since this is a great time to reflect on the past year, I encourage you to think about your spending this year. Have you spent money with intention? Did you get value from what you purchased? Did your purchases make you feel good? We live in a consumer-driven economy, which, unfortunately, means that family is being pushed aside in favor of consumerism (as evidenced by stores being open on Thanksgiving Day). It’s easy to get caught up in spending money, but when you spend with intention then you’re getting the most out of your money.
So how do I spend with intention? By looking at my spending in three different ways…
Focus on Value. To spend with intention, my focus is on value… where do we get the most value when we spend money? That is a very personal question with a multitude of answers for every one of us. First, we need to determine where our money is being spent, and then assess if it is being spent wisely. During this past year my wife and I spent more at Amazon than we should have (free two-day shipping makes it too easy!), so we asked ourselves if we were getting real value out of our Amazon purchases and realized the answer to that question was no. So, we decided to scale back in the new year because we don’t want to have a bunch of unnecessary stuff. On the other hand, we spent some money this year to buy brand new carpet because our previous carpet was old and dirty, and that purchase has made a positive impact on our lives every single day… we now feel comfortable rolling around on our carpet with our daughter. We got a lot of value from that purchase. Another area where we receive tremendous value is our monthly massages… we love spending money on that experience! Actually, it has been found that people who spent money on experiences rather than material items were happier and felt the money was better spent (Forbes: The Secret to Happiness? Spend Money on Experiences, Not Things).
Here’s a trick: when you determine something is valuable to you, use that as a measurement against other purchases. For example, one client had a housekeeping service that cost $100/month, and they received tremendous value from that service. Their house was clean and they felt it gave them more time to spend with their kids on the weekends. Then we looked at their storage facility rental which also cost about $100/month. Did they get the same joy from storing their stuff at an offsite facility? For them, the answer was no. They rarely accessed their stuff at the storage facility, and they hadn’t considered that $100/month should be bringing them joy because it was a recurring expense, which brings me to…
Automatic Spending. An area where it is easy to spend without intention is on our recurring expenses, so my wife and I take a look at those every year. There are so many items that could be on this list, but examples include:
- Cable television
- Cell phone
- Gym memberships
- Storage facilities
- Cloud services
- Music services
- Amazon Prime
Take a hard look at all your recurring expenses to determine if you can either cut them out completely if you aren’t receiving much or any value from them or find a way to reduce the recurring charge. It is so easy to sign up for all of these different services that we often forget about them and then we end up doing the opposite of The Automatic Millionaire… we become The Automatic Spender! Recurring charges aren’t the only area of our spending where we sometimes spend without intention, we can also do this in everyday life were habits are well ingrained, such as a daily Starbucks visit, eating out for lunch every day, buying a soda with every meal, and grocery shopping choices. Spending with intention is the sum of many small decisions that can add up to big money savings over time!
Time Value. Another way to look at how to spend with intention is to look at it through the lens of time. What I mean by that is how much time is your spending costing you? Benjamin Franklin said Time is Money, but I believe that our time is more valuable than money. Time is a commodity that we all have the same of (we all have 24 hours in a day) whether we are rich or poor, which is why I think it is more valuable than money. When I look at spending through the lens of time, then I start to look at things differently. If I have to wait in line for 10 hours to save $50 on a Black Friday deal, was that really worth it for me? The answer to that will help me be more intentional about how I spend my money. If I spend time shopping, but then spend an equal amount returning half the items (thus doubling the amount of shopping time), then was that a valuable use of my limited time? If I have to work 15 hours every month to earn enough to make that monthly payment on that shiny new car I want, is that time commitment worth it? Looking at my spending as a function of time helps brings things into focus for me. Along the same lines, buying time can be another area where money can be spent with intention… whether it is having someone clean the house, having a babysitter watch the kids to give you some much needed R&R or even hiring someone on Fiverr to complete a difficult task for you. Sometimes, it’s worth it to spend the money to have the time.
Ultimately, what we spend our money on should be a reflection of what is most important to us. When we spend with intention, we show others, but more importantly ourselves, what really matters to us. And when we are able to focus on what really matters to us, then I believe our lives become much freer and fuller… and that is something to be grateful for.
How do you spend with intention? Please let us know in the comments section below! Or if you know somebody who wants guidance on how to spend with intention, have them contact us so we can show them how. Happy Holidays!
- Published in Spend Wisely