Everyone defines “spending wisely” differently depending on personal beliefs, likes and dislikes, and lifestyles. There are, of course, a few universal principles such as: not living beyond your means and saving money for unexpected emergencies. The differences arise in what people consider worthwhile purchases. For example, someone who hates cooking may not think of eating out as a poor decision, but a passionate cook sees it as a waste of money. The differences of opinions are fine as long as each person is able to live within their means. If you find yourself having a hard time spending less than you earn, however, you may need to reevaluate your spending habits. Sometimes the best way to take control of your spending is to change your mindset.
Managing your finances can be difficult and requires self-control just like maintaining a diet. One way that helps people maintain their diet and not eat that all-too-tempting-donut in the break room is to think about how much exercise it would take to burn off the extra calories if they did indulge in the donut. The same thought process can be applied to impulse purchases. Instead of thinking of the cup of coffee as only costing $5, think of how much time you would need to work in order to have the money to pay for the coffee. For example, if you make $20/hour, you would have to work for 15 minutes to pay for the $5 coffee. If you are buying coffee five times a week, then you are spending $25/week or one hour and fifteen minutes of work. Is that coffee worth the hour and fifteen minutes of work? Or, is it more worth your time to make coffee at home for significantly less money? If you apply this thought process to all your purchases, it may be easier to identify which ones should be eliminated and help you stick to your budget.
Sage Personal Finance 