Mindful spending and budgeting habits are about separating needs and wants. You need to spend money on food, your mortgage or rent, and your utilities. You want to spend money on nights out, a new pair of shoes, or other things that make you feel good.
Part of good budgeting is to reserve a portion of your funds for those wants. You can think of this as an allowance you give to yourself for those indulgent treats. See our Autopilot Spending Blog for more information about creating an allowance.
So, you have an allowance for your wants. That means you’ll stick to it no matter what comes up, right? Think again. Our inner selves are great at rationalization and making us think that our wants are really needs. How many times have you thought to yourself, “I really NEED this night out with my friends. I earned it because I worked SO hard this week.”
That’s where an “I Want It” tax can help to further curb your unplanned spending. Find a cookie jar, piggy bank, or other container and label it as your “Want Tax” jar. Every time you make a purchase that is really a “want”, put $5 into your jar.
At the end of the month, add up your Want Tax and see how many unnecessary purchases you made. Did your jar earn $20? $50? $100?!
Your Want Tax can help you understand how impulsive purchases can wreck a carefully crafted savings plan and budget. And the best part? You can now put your Want Tax toward your savings or debt reduction goal.
Wondering what else you can do to take control of your financial life? Financial Game Changer, the latest book from author and financial advisor Lynn McCarty, offers simple, practical tips to help you shrink your financial worries, gain financial confidence, and build lifelong money habits to make you feel more secure with your finances.
You’re already on your way to financial freedom. The next step is to purchase Financial Game Changer, available at any of the following digital stores:
Buy it now at Walmart
Buy it now at Barnes & Noble
Buy it now on Amazon