Are you taking a hard look at your budget after prices went up due to inflation? While the costs are leveling off, you're probably still paying more for everyday items. Purchasing power has also been limited, especially if you’re in the market for a home due to interest rates. If everything seems to be rising except your salary and bottom line, try “mindful spending” to save money when costs go up.
What You Need To Know
Even with inflation coming down, things cost more than a few years ago. With mindful spending, you can adjust your budget and spending habits to cope with increased expenses and financial pressures. Mindfulness helps you be realistic and intentional with each financial decision (large or small), question your needs versus wants, and make deliberate choices to avoid impulse purchases. This mindset shift helps with managing current expenses and will serve you well long-term so you can reach your financial goals.
How to stop spending
Have you asked yourself this – How do I stop spending money when the cost of everything is going up?
Costs are rising so rapidly it’s almost hard not to spend money.
Let's talk about reality before we show you how to spend mindfully, with more intent and purpose.
It’s not your imagination. The price of goods and services is rising even in low-cost-of-living cities like Kansas City.
In 2024, prices are still going up, but we're seeing some slowing. As of August 2024, there was the smallest 12-month increase since April 2021, according to the Consumer Expenditures Survey from the U.S. Bureau of Labor and Statistics. This comes after 2022, when we saw the largest price increase in goods in 40 years!
Even if prices are not climbing as much, they're still high.
So, how do you save money when everything costs more? First, you must get back to basics and consider a budget. Nobody wants to be constrained by a monthly allotment, but budgeting can help you adjust to the cost increase.
The reality is the majority of Americans are already budgeting. 74% of Americans said they have a monthly budget in a NerdWallet survey. And, not surprisingly, with cost increases, 84% said sometimes they go over budget.
In the NerdWallet survey, the top categories where people spent too much money include:
- Groceries – 47%
- Dining out – 34%
- Clothing – 26%
- Entertainment – 24%
- Food delivery – 19%
So, when you think about cutting expenses or budgeting, consider these top categories as areas to cut or limit spending.
Are these also your top categories for overspending?
With mindfulness, every dollar spent reflects a decision you made. Sometimes, you have no choice. You need food on your table. But, can you be more thoughtful in choosing where you shop or if you use coupons?
So, start with being more mindful, so you don't spend money you don’t have to.
How to not spend as much money
Mindful spending will help you adjust your spending habits so you do not spend money unless you have to.
First, you have to adjust your mindset about costs. You may be overspending on groceries because the cost has increased.
So, to help with your mindset about this and to adjust your budget accordingly, look at the latest Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics.
The Bureau of Labor Statistics 2023 report looked at spending in 2022. Household expenses were up 9% in 2022.
Household spending increased the most on:
- cash contributions - up 14.1%*
- food - up 12.7%
- personal care products and services - up 12.3%
- transportation - up 12.2%
*Cash contributions include money given to outside people or organizations. They may include alimony, child support, care of students away from home, and contributions to charities, religious organizations, educational groups, or political organizations.
Be mindful of these rising expenses. Have you raised your food budget by 12% to adjust the extra 12% increase in groceries? Mind you, costs have continued to go up.
You may have to change your mindset about food and be realistic about these costs. An increase in your food budget means a cut somewhere else.
Also, don't just accept increased food costs. Consider how you can help bring down the costs for your household. Are there things you can do not to spend as much money? What about clipping digital and paper coupons? What about shopping at a discount store, farmers market, bulk grocer, or shopping sales?
Once you change your mindset about the cost increases and realize how that's impacting your budget, look at discretionary costs and spend less on those. For example, spend less on entertainment or airfare.
Going out of town on vacation is nice, but do you need to do that when you know transportation costs are up 12%? Maybe you can do a staycation or drive somewhere to save on the increased cost of air travel. To not spend as much money when everything is going up, you must change your expectations of what you can spend and adjust where you spend money. If you're spending more on food, you must cut something else.
How to spend smartly
Ready to spend smartly? Tap into the power of your mind.
While we’re using the word mindful, and we hope it takes you on a journey of financial Zen, we’re not going to have you grabbing a yoga mat or meditating.
We’re helping you spend smartly by thinking about your spending decisions and being mindful of your spending habits. That way, you can cut expenses even when costs continually go up.
When considering these mindful strategies, think of them in relation to the largest consumer expenditures. We know what categories increased the most. Now, look at the categories that account for the most household expenses, according to the latest BLS data:
- housing - 33.3%
- transportation - 16.8%
- food - 12.8%
- personal insurance and pensions - 12%
- healthcare - 8%
You may not be able to do much about housing unless you're moving, but transportation may be an expense you can cut if you travel by air often. Perhaps it's time to shop around for a new insurance policy. Here are 10 money management techniques to spend smartly.
1. Use cash to better track spending habits.
While many people use credit cards because they’re convenient and offer rewards that have a cash value, it’s hard to keep track of your spending. Swiping is mindless, and it’s easy to overspend.
Cash holds you accountable if you set a spending limit each week or month, and only have that much cash on hand.
Some people use envelopes to keep themselves accountable, pulling from each envelope when they have an expense.
You can set this up any way you want, but switching from credit to cash can hold you accountable and help you visualize your expenses better.
Of course, you won’t be able to pay for everything with cash. For example, you’ll probably continue using a Bill Pay service for expenses like your mortgage and utility bills. While some of these bills fluctuate month to month, for the most part, they’re somewhat consistent.
If your utility bill get crazy in the summer or winter, you can even out your expenses by utilizing the utility company’s payment services, which average your yearly expenses over 12 months so your bill is consistent month to month, and you can budget better.
Every utility company calls this option something different, but you can usually find information about it on your bill.
Other than those automatic payments, switch all your other payments to cash. So, you’re accountable for what you spend.
2. Think about your spending habits.
Cash is tangible, so it forces you to think about your spending habits.
Where are you spending the most money? Knowing your spending habits can help you save money. You may think you know your habits, but do you?
Start with an accounting of your expenses, whether with cash, bank software, a money management app, pencil and paper, or a spreadsheet . You’ll see trends that likely correlate to habits.
It’s often the little things that add up to a big cost over a month.
Think about those spending habits and stop the ones that are costing you money.
3. Be mindful of spending triggers.
To truly stop those spending habits, you have to be mindful of the spending triggers. What’s causing you to spend that money?
What triggers you to impulse buy – whether that impulse is getting takeout, having food delivered, or shopping online?
How can you overcome those triggers? What if you meal prep or reduce workweek stress? Would that help you be less inclined to order takeout during the week when it’s 5 P.M., and you don’t know what you will eat for dinner? Think about how often you run out and get takeout food or have it delivered because you have nothing in the fridge and are hungry. When you meal prep, you always have something in the meal to curb your appetite and spending.
What about cutting expenses on online shopping? Instead of mindlessly scrolling through an app on your phone at night, what if you deleted that app and only shopped on a computer? Would that spending be more intentional and limited because your computer isn’t with you every moment of the day?
Also, think about your spending when you’re at the store. Do you impulse buy at the big box store that sells items in bulk? Or, do you buy only what’s on your list?
Think about your habits and triggers.
4. Stay in the moment to balance needs versus wants.
Also, be in the moment. When you’re shopping, think about what you need versus want.
Are you purchasing things on your favorite shopping app because you need them or because they look cool?
Think about each purchase. When you're practicing mindfulness, you're present in the moment. You don’t think about the future or past. You think about whether you truly need that item at that moment.
Perhaps the one exception to staying in the moment is meal planning. That can save you a lot of money and avoid 5 P.M. takeout runs. Plan your meals so that when you’re asking yourself what’s for dinner, you have something nearby.
To be mindful of your spending, always ask yourself:
- Do I need this?
- Why am I buying this?
- Can I afford this?
- How many hours do I have to work to pay for this?
Even pausing before hitting purchase can give you enough time to have second thoughts. These questions can be the barrier between unnecessary spending and meaningful savings.
5. Be financially authentic with gratitude.
In a world of quick Tik-Tok videos and social media that tends to favor our best days rather than our worst or “real days,” it’s easy to lose focus on what matters and to live authentic lives.
Don’t worry about what everyone else is buying. Worry about what you can buy, given your financial situation.
Being financially authentic means recognizing and accepting your current financial reality instead of comparing your journey to others. You focus and embrace your unique path.
Gratitude is a common mindfulness practice. You can use this in the context of your expenses and financial reality. Focus on what you’re grateful for in your life. Perhaps that’s the house you were able to buy. With gratitude, you can shift the focus from what you lack to what you have. That shift in thinking also stops the urge to buy more needlessly.
It's about acknowledging mistakes, celebrating small victories, and understanding that financial wellness is a journey, not a destination.
6. Be mindful about budgeting.
When you hear “budget,” how do you feel? Many people don’t like that word because it feels restrictive. And takes the pleasure out of spending money.
However, when approached with mindfulness, budgeting becomes an enlightening process. It's not about what you can't do with your money but understanding where it goes. This clear picture, facilitated by a non-judgmental awareness of income, expenses, and goals, forms the foundation for financial growth.
7. Visualize spending.
You’ll be forced to visualize spending when you use cash and see it dwindling before your eyes each week or month.
In addition to using cash, tap into the power of your senses, specifically your eyes. By visualizing spending you can envision what things cost and their value to your life. It’s a powerful money management technique to spend less.
Here’s how it works. First, you categorize your expenses into short-term, medium-sized, and long-term.
Close your eyes and imagine what those look like. When you’re planning a beach vacation, indulge your senses. Enjoy the smell of the ocean, the taste of seafood, and feel the sun on your face. What will that cost, and how long will you have to work to pay for it?
Is it worth it? How does working that much make you feel?
By visualizing each expense, you may feel differently about them and make different choices.
8. Keep saving money.
If you’re budgeting, cut where you can, but still put some money in your savings and investment accounts.
You never know when you’ll need a rainy day fund. So, always save money.
You can leave a little money in a regular savings account and put the rest in a high-interest savings account. Some are delivering nice returns right now because interest rates are high.
If you’ve had a high-interest account for a few years, shop around. You may be surprised at some of the rates for saving money.
9. Be a mindful investor considering retirement and other financial goals.
You also want to be mindful of the future, whether that’s retirement with your 401(k) or Thrift Savings Plan or paying for your child’s college with a 529 plan.
Some of these accounts offer tax savings, impacting you beyond your monthly contribution. So, if you’re not mindful, you could cost yourself more money in the long run.
Also, by reducing what you invest, you may lose a company match or other employment benefits of a retirement account.
When you’re a mindful investor, you don’t get caught up in the whirlwind of returns, interest rates, and market fluctuations. You stay the course and keep investing, even if the costs of everyday basics are going up.
You look beyond the numbers and trends and find peace of mind in your long-term goals and financial outlook.
10. Get an accountability partner.
Have someone hold you accountable – whether that’s a partner, spouse, money management app, or financial planner.
While we talk about tapping into your senses and emotions with the visualization money management technique, sometimes your emotions can force you to make unwise money management choices.
For example, when you’re feeling the pressure from increasing costs or seeing the market dip, you may make an irrational investment decision.
A financial advisor can help you navigate the rough times without being influenced by outside factors to make rash decisions.
They can also help you stay on track with your investments, no matter your budget. They may have other tips if you lose your job, get divorced, or costs rise too much for your current situation.
They’ll also make sure you’re always a mindful investor.
Money management apps can be an accountability partner, showing you expenses and potentially sending you alerts, but a human always provides better insights and perspectives.
Compound effect of mindful savings
Just as compound interest accumulates over time, so does the impact of mindful savings. When made consistently, each decision to save rather than spend can lead to significant long-term growth. Remember, it's not about grand gestures but the accumulation of small, mindful decisions over time.
Mindfulness strips away the external noise, bringing clarity, purpose, and intention to your financial journey. By being mindful of your money, you don't just save easier; you save smarter!
Solving problems for readers of:
