In recent years budgeting has become a four-letter word. It evokes scarcity and constraint. So the term conscious spending came out. I first read about the term conscious spending in “I Will Teach you to Be Rich” by Ramit Sethi. What is the difference between conscious spending and budgeting? Are they at odds with each other? Do they complement one another?
Budget isn’t a four-letter word, and it’s writing where you would potentially spend your money. I love zero-based budgeting, where every dollar gets a name. Ramsey Solutions and YNAB are the best places to learn how to budget, and I love YNAB’s cash-based budgeting.
Typically at the beginning of the month, you sit down and assign or predict where you want your money to go as it comes in. And help prioritize those. You use data from tracking your expenses to help plan the next month’s budget.
Conscious spending is a mindset to purposefully spend money (or save and invest) where your values are instead of blindly spending money on things you don’t value. You don’t need to budget; just track your expenses. Then, day to day, you spend money where you want. For example, if you value good food, then you should spend money there but remove unconsciously spending on lattes.
Some things to note when you are consciously spending (saving or investing). Know what you value today could and will change. If you don’t plan to get married or have kids, you may change your mind.
Budget is more than how and plan, and conscious spending is more of a mindset. To unlock financial freedom, you need both (plus automation). Define what your rich life or free life would look like, and from there, make a plan for your money (budget) and consciously focus on things today and in the future (consciously spending) to create your rich life or free life.
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This article is for informational purposes; it should not be considered Health, Financial or Legal Advice. Not all information will be accurate. Consult health, financial, or legal professional before making any significant decisions
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