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Conscious spending plan: how to stop feeling guilty about spending money

Financial Wellness

Money is very emotional.  When we’re trying to take control of our finances, oftentimes we stress about every purchase and find ourselves feeling guilty about spending our own money.

We have all heard this idea:  girl, if only you would just give up your daily Starbucks, avocado toasts, and your Soul Cycle classes, you would be able to pay off all your debt, put your kids through college and retire early in Boca Raton.  And don’t forget to track every penny and adhere to a strict budget!  Ridiculous.

First, being told what you cannot do with your money is not going to help you build healthy long-term financial habits.  It’s uninspiring, at the least.

Second, budgets don’t work as a long-term solution.  Budgeting is a lot like dieting.  It might yield some short-term results, but it prevents us from succeeding in the longer-term.

Instead, I advocate conscious spending. This is a practice where you analyze your spending habits, understand what your core values are, and connect your spending to your values.

As a result, you can feel better about financial decisions that you make and derive more enjoyment from spending on what matters to you.

If you have a conscious spending plan in place, at the end of each month you’ll know that you’ve paid your bills, saved and invested, and have the money to spend on fun things guilt-free.

What is a conscious spending plan?

Most of us spend money on whatever, and then we reactively feel good or bad about it.  With a conscious spending plan, you are being proactive.

You decide exactly where you’re going to spend your money and how it’s connected to your core values.

As a result, you are moving closer to achieving your financial goals and you free yourself from feeling guilty about your spending.

One important thing to understand is that your conscious spending plan is not a strict budget.  It is a flexible, high-level framework that is completely unique to you.

How to make a conscious spending plan

I am a big fan of the 50/30/20 approach to your money.  It goes like this:

  • 50% of your take-home pay goes to your needs. This includes housing, groceries, bills, transportation, minimum debt payments, etc.  These are the things you must pay for every month, no matter what.
  • 30% goes to your wants or fun. This includes things like gym memberships, magazine subscriptions, drinks with girlfriends, or another pair of shoes.  You don’t really need all those things, but enjoying your life is important.
  • 20% goes to Future You. This includes your emergency fund, debt payments above minimums, and your other saving and investing goals, including your retirement.


You can adjust those percentages to fit your life.  Maybe you live in a nice neighborhood and have high mortgage payments.  Then your “needs” bucket might be closer to 70%.  No problem!  Turn your plan into 70/20/10 and work slowly towards increasing your “future you” bucket contributions.

Maybe your whole income is going to the “needs” bucket right now and that’s the reality.  Either way, be aware of where you are now.  As your income and needs change, slowly make progress towards your goals.

I’ve created an Excel workbook to help you get a sense of how you are spending right now and start setting intentions for where you want to be.

You can download it here.

You will need a copy of your recent pay stub and a list of all your transactions for the past month.  I like Mint and Personal Capital for tracking your monthly spending.

Connect your spending to your values

Now let’s talk about your values and how they fit into the conscious spending plan.

Money needs clarity.  Ask yourself, what do you want from your money?  Or, in other words, what do you want from life?

Money is a tool to help us achieve a goal, not an end in itself.  If the way we handle our money conflicts with our personal values, we are not going to wind up living happy and fulfilled lives.

To help you identify your core values, I recommend you try a value ladder exercise.  It is very simple.  Start by relaxing and collecting your thoughts.  The goal of this exercise is to reflect on how you really feel.  Then ask yourself, what’s important about money to you?  Try to go a little deeper each time you ask yourself that question.

If you need some extra help getting started, I’ve included a long list of possible values that might resonate with you in the workbook.

Make a list of your top 5 core values, something that has the highest priority in your life.  Use it as your true north for what really matters.

Next time before you make a spending decision, take a minute and ask yourself: “Is this purchase in alignment with one of my core values?”  If the answer is no, look for ways to make some adjustments.  It will become easy to cut spending on things you don’t care about and spend guilt-free on things that support your values.

Ditch the guilt

You’ve created a conscious spending plan that will help you achieve your financial goals.   You’ve paid for your “needs”, allocated some money to the “Future You” bucket, and have money in your “fun” bucket.  You did the math.  By creating a plan, you have already given yourself permission to spend money on “fun” things.  So, ditch the guilt and treat yourself!

The bigger picture

The goal of creating a conscious spending plan isn’t to limit you, but instead, help you increase awareness about your spending habits.  When you start to connect your spending to your values, you’ll achieve more satisfaction from your money and your life.

Be kind to yourself.  And go buy that avocado toast!

Download  our Excel  workbook  “Conscious  Spending  Plan”  below:

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