What Can Conscious Spending Do For You?
The United States and its population are becoming increasingly enslaved by debt. For the first time in history, the US had an outstanding consumer debt of over $4 trillion as of February 2019! Consumers spend around 10% of their income on non-mortgage obligations like credit cards, personal loans, vehicle loans, and student loans.
The average American has $4300 in credit card debt today, with total credit card debt exceeding $1 trillion. Simultaneously, student loan debt has tripled in the last decade, reaching $1.5 trillion — the second-largest expenditure an individual will likely make in their lifetime, second only to home ownership.
What can people do to avoid getting into debt?
Spending Carelessly vs. Spending Consciously
Even while each scenario is unique and no one-size-fits-all solution exists, irresponsible spending is a problem that many Americans face. This is mostly due to the widespread use of credit cards for most purchases. People are prepared to pay twice as much for an item if they pay with their credit cards rather than cash, according to studies. This is especially true for things with difficult-to-quantify values, such as entertainment tickets, or when purchasing on impulse.
As a result, many people find up maxing out their credit cards or even exceeding their credit limits, resulting in high interest rates and credit card debt. Some may be surprised to learn that two-thirds of Americans have no idea how credit cards function.
In any event, controlling one’s spending can help people avoid or get out of debt. One method is to stick to a rigid budget.
Conscious spending is a more engaged and enjoyable method. It’s a way to collect all of your squandered cash and direct it toward things that make you happy or help you better. It entails making better use of your money by purchasing only what is necessary and avoiding being cash-strapped all of the time. People who practise conscious spending can enjoy in their interests and vacation while simultaneously saving money.
What Is The Best Way To Manage Conscious Spending?
Conscious spending can be achieved in four simple steps:
- Track your expenses — After a few days to a week of constant expense tracking, you’ll be able to see where you spend your money. You might be surprised to learn where a significant portion of your money goes.
- What makes you happy vs. what makes you happy – Make a list of everything that brings you joy and how you’d like to spend your money. These are the things and experiences that you should concentrate on. Anything else that doesn’t give you that sensation is generally something you can live without.
- Compare – When you’re going to make a purchase, think about the things you care about and compare them. Is the cost of an annual trip abroad or an investment in your education worth buying a new pair of shoes twice a month?
- Set your wishes as goals – Whatever desires you have, whether it’s for a new pair of shoes, a trip overseas, or investing in your education, it’s better if you make them goals and work toward them. It will help you better focus your finances and stay on target.