Step-by-Step Guide to a Conscious Spending Plan

Making intentional spending choices could help your overall financial health.

Impulse purchases can throw a wrench in any well-planned budget. Whether it’s buying an item you find on social media or picking up a little something extra after a tough day of work, those purchases add up. Even though most impulse buys are small, they cost Americans an average of $2,000 per year.¹

If you spend more than you should each month, finding ways to curb your impulse purchases could help you stay out of debt. Being intentional about each purchase you make could make it easier for you to keep your spending under control.

Key Takeaways

• Conscious spending plans encourage you to live within your means and consider how each purchase you make impacts your finances and your life.

• Conscious or intentional spending is more of a mindset than a plan and may be used alongside different budgeting methods to help you take control of your finances.

• Celebrating your wins as you go may help you stay motivated to continue following your intentional spending plan.

What Is Conscious or Intentional Spending?

Intentional or conscious spending is a mindset rather than a budgeting system. It encourages you to carefully think about your money, financial goals, and how spending habits impact your ability to reach those goals.

For many people, this involves considering each purchase before making it. As you think about the purchase, consider how it impacts your finances, whether it could improve your life, fill a need, or help you reach your financial goals.

The primary function of intentional spending is to help you build your savings and grow your wealth over time.

How to Create a Conscious Spending Plan

Creating an intentional spending plan could make it easier to stick to this mindset. Here are a few steps that could help you become more intentional about your purchases and financial habits.

Identify Your Priorities and Goals

The first step in creating an intentional spending plan is to identify your goals and priorities, which are unique to your situation. Think about your shortand long-term financial goals and identify your key priorities.

For some people, priorities could be paying off debt, building an emergency fund, or using the money they save each month to start investing. For others, it may involve saving for a down payment on a new home, paying off an existing mortgage, or creating a vacation fund.

Track Your Spending and Create a Budget

It’s easier to be intentional about your spending when you know exactly how much money you have and where it goes each month. Track your spending and create a budget to help you reach your goals.

By tracking your spending, you can see the types of purchases you’re making and where your money is going. Use that information to identify areas where you could cut back or eliminate entirely if they’re not helping you reach your goals.

Once you have a clear picture of the expenses you need or want to keep, spend your remaining money more intentionally each month.

Think About Each Purchase

Conscious spending plans require time and evaluating whether your purchase could assist you in reaching a specific goal.

Before you buy anything unnecessary, like takeout or that new computer, consider how the purchase could impact your goals. This helps you only buy items that add value, are true necessities, or benefit your well-being.

That’s not to say that you can’t make the occasional splurge now and then. But it does mean you may want to budget for those splurges. Consider opening a dedicated savings account as a splurge fund or factor splurges into your monthly budget so your savings goals won’t be derailed.

Invest in Quality Instead of Bargain Hunting

Who doesn’t love a good deal? Bargain hunting is fun when you’re looking for a dopamine rush. But it could result in spending more money over time. Bargain products are often lower quality, and therefore, may break down faster, forcing you to replace them more often.²

When practicing intentional spending, you might choose to focus on investing in high-quality products that are timeless, not trendy, and have a better chance of lasting longer. You may even pay more upfront for the purchase, but you could save money in the long run.

Celebrate Your Wins

Conscious spending plans take some work. They require you to be vigilant about your money and purchases, which could increase feelings of financial stress. However, some could also argue that feeling in control of your spending could bring a bit of relief and help you feel a sense of empowerment.

Momentum is key, and that’s why it may feel good to celebrate your achievements as you go. Consider setting smaller goals or establishing milestones that are easily reached, especially in the beginning. And once you reach them, celebrate your success.

Just make sure those celebrations don’t break the bank. Maybe give yourself permission to buy something you’ve saved for or indulge in a fancy night out with your friends. Ideally, these celebrations should come from your splurge fund, so you don’t wipe out your savings or abandon your conscious spending plan.

Final Thoughts

Conscious spending plans may make it easier to live within your means and reduce the temptation to make impulse purchases throughout the month. Over time, you may see an increase in your savings, a decrease in your overall spending, and an improvement in your financial well-being.

Whether you implement a conscious spending plan or prefer to just stick to a budget, opening a dedicated savings account may make it easier to set money aside.

Learn more about Jenius Bank’s savings accounts and see how a high-yield savings could help put your money to work.