Conscious Spending: How to Live a Financially Fit Life

Conscious spending is the process of deciding to only participate in planned spending (usually the month before). Most people partake in this practice after they get wise about creating cash flow. But you have to be motivated to win. Unfortunately we are usually motivated financially, when we are losing the battle. These motivators to led a person to question their financial status. The #1 reason being, they are not living a lifestyle that matches the dream they envisioned. The first step to solving the problem of a bleeding wallet is to access what caused the damage and prevent future attacks (sorry for the grim analogy, but that is what it feels like). Usually the lack of funds comes from three primary places:

Failure to plan/Free-styling with your finances: A goal without a plan is not a goal, it is a wish (Antoine de Saint). So when we have an idea of where we would like to be financially, it means nothing. Everyone wants a million dollars, but how many of those person has a plan to obtain it?  You cannot spend hours shopping, vacationing, spending, picking out clothes and simply wait until payday to plan that one check. Then repeat the process until the next check comes in. Here are some great tips that will change your view on paying your expenses:

Step 1: Call all your expense providers (cable, cell, insurance, finance companies, etc.) and tell them to move your payment to the 5th of every month. Now all your payments are due all at once, this makes planning payments simplified. This will cause credits, adjustments, retro-billing, and possibly even double payment. Nevertheless it is vital to do this.

Step 2: Plan what u have chosen to spend your income on for next month. Write it down and don’t spend a dollar that isn’t a part of your pre-planned spending. This is the key to keeping what you earn. Conscious spending starts with planning your spending, and ends with obeying it.

Lack of a good paying job/Failure to obtain continued education: The first mistake one can make with finances is to believe they have all the knowledge necessary to obtain financial vitality. It takes advisement, research, networking, and educating oneself to gain the knowledge needed to avoid common costly mistakes; like buying a home while you’re broke or living without an emergency fund.

Living a lifestyle above that of your income level: You cannot live like the Joneses, with half of their paycheck.The first rule of finance is to limit your expenses so you enjoy more income. With social media sites displaying grand events of others it can be difficult to admit you aren’t there yet….financially. But that is exactly what you need to do, don’t mimic the lifestyles of others. They could be broke, up to there necks in debt, or just spend everything they earn.

Now that you have aligned your expenses, have started to seek financial knowledge, and ignoring what your friends are doing… you can begin your plan. Conscious spending is liberating and can change how you view money. We can begin with a change in mindset and replace the word budget, with plan. Many associate the word budget with restriction, so we will use plan. You need to plan your NEXT month’s spending today. Every bill, every gift, every night out on the town. By choosing to “go out” 4 times next month, you can analyze when you stray from the plan. Below are several steps that will help implement your conscious spending plan:

Step #1: Use an envelope system of cash or separate bank accounts for your spending categories. For example if you plan to spend $100 on new clothing each month then place $100 in an envelope at the beginning of the month and when the money is gone, shopping is over for the month. If you opt for the bank account, simply open an additional no fee checking account and set up an automatic transfer. I would limit the number of accounts and maybe just use it as your “fun money” debit card.

Step #2: You need an app such as Everydollar (CLICK HERE!) that puts you in a position to manage your plan on the go. This is vital as adjustments and unexpected expenses are made every month. This also helps by showing what percentage of your income is being spent in categories you create.

Step #3: Plan a guilt free spending, pocket fund, blow money, or shopping category because you will need to actually treat yourself in order to make the habit stick. It has been proven that reward ques help create new habits. When you reach a savings goal maybe give yourself a shopping trip! There is nothing wrong with spending money, as long as you are saving, budgeting, and aware of exactly what you are purchasing and how it impacts your plan.

Step #4: Impulse purchases are banned. This is at the heart of conscious spending and there is no exception. You are not allowed to spend money on anything that you did not plan in the prior month.

Step #5: Ensure if you have a partner, that this plan isn’t based on “The Plan” but on the “Why”. My children are my why, I want to create a legacy for my family so they can enjoy everything life has to offer. Achieving financial vitality accomplishes that goal. Find your “why motivator”.

Step #6: Unhealthy vices will only disrupt your plan and will cause failure. You cannot attack a financial problem while struggling with smoking, obesity, drug use, or addiction. Seek help in that area first before attempting a financial change.

Step #7: Automate everything. Online banking and automatic transfers will make your life so much easier. Now that your bills are all paid at the beginning of the month you can set automatic billing and automatic savings. It really helps to name your savings account, such as “car fund” or “home down-payment”  this will activate an emotional response when you think about touching it. You won’t think twice about touching account 77555 with $5,000 in it. You will never steal from your home down-payment fund.

Step #8: Get unhooked from brand obsession. Now is the time to focus on building wealth not emulating what you believe wealth looks like. $300 sneakers, $2,000 purses, $200 dinners, and every meal eaten out; need to be cut out of your spending if that how you have been living. That is, unless you are saving 10% of what you earn and this part of your conscious spending. In that case… enjoy!

As you can see, conscious spending is simply understanding what income is coming in and deciding how it will be spent. It is deciding what lifestyle expenses are important to you and will be part of your guilt free spending. There is nothing wrong with spending money, if you have taken care of home first. Be sure once you have met all other obligations to allocate funds to pay down debt, short-term savings, major purchase savings, a rainy day fund, and the treat yourself fund.

You now should know your total monthly expenses, income, and  the strength of your ability to save. In addition, you have a plan to win and are educating yourself to become a better manager of money.


  • Stefan
    / Reply

    Starting with a plan is always the best thing to do otherwise you just have a bunch of numbers in your budget with no real direction. There are many expenses people can cut and I enjoy how you say they should consolidate the payment date

  • Dividendsdownunder
    / Reply

    Hey Ron, nice plan. Anyone who isn’t on top of their finances would do well to follow your easy step by step guide and your thoughts.

    Luckily we have also taken on many of the points you said 🙂


      / Reply

      Thanks Tristan, I hope my blog serves that purpose to many who may need the advice.

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