Overcome Bad Spending Habits By Knowing What’s Important to You

What do we need? Our definition of "the basics of life" has shifted quite a bit over the last few decades. As a result of this shift, many things that were considered luxuries at one point are now considered needs. Indeed, how many of us feel as though we are living a sub-standard lifestyle without a smartphone, an invention that didn’t even exist until about a decade and a half ago?

And I don’t want you to give yourself too much of a hard time for thinking this way. Humans are just wired like that. We continually adjust our expectations of what we consider as necessities, and it’s been going on since the beginning of time. A smartphone is quickly becoming a necessity, just as a microwave or a TV became a necessity from a generation ago. At one point, having lights in the house were considered a luxury, but generations before us quickly adopted it as a way of life. The list goes on from generation to generation. This is nothing new.

In so many cases, we want more, more, more. But does having more stuff really improve our quality of life? There isn't anything wrong with wanting to be comfortable, enjoying beautiful things, and even purchasing things that we like. However, is our desire to buy these things getting out of control? When we start using up all of our financial resources to buy such things - especially if we have to borrow in order to do so - it might be an indication of a problem.

Will We Ever Be Truly Happy with Our Stuff?

Another issue is that, when we stake our happiness on having more things, we can never truly be happy. There's always a newer gadget, a better TV, or more money to be had. It's even worse if we decide that we want these things to keep up with others, because we "deserve" them, or to impress friends and family. If we continually seek more things as a way to be happy, only to find ourselves just barely making ends meet (or worse, being in debt), it might be time to take a step back and re-evaluate the way we do things.

Changing the Mindset

Of course, we don’t all have to be this way. There’s hope if you have a spending habit you are ready to change. All you have to do is to consider the issue and work toward changing your money mindset. Here are some steps that can help you change your relationship with money.

Evaluate what's important to you: The first thing you need to do is to be honest with yourself and decide what's important to you. If spending more quality time with your family is a priority, then spending massive amounts of money on video games doesn't really fit your values. In fact, you are probably spending too much time being isolated playing games by yourself. On the other hand, if playing video games really helps you decompress after an otherwise really productive schedule and that’s important to you, then it may make sense for you to spend a decent amount on video games as long as you can afford them.

Look at your spending: Next, you need to examine, with brutal honesty, the way you spend your money. Does your spending reflect what's important to you? If you are having trouble looking at your money with some measure of objectivity, it might help to have another person look at the numbers and point out items that strike them as frivolous, or inconsistent with what they know of you and your values.

Don’t underestimate the importance of having someone else look at your finances. Sometimes people already know what needs to be changed, but they convince themselves, sometimes subconsciously, that it’s okay when no one notices. When you open up all your decisions to a third party, it’ll be easy to identify which expenses need to be cut because you will probably be embarrassed to admit to paying for certain things.

Cut back on the things that aren't important: Make a plan to cut back on the unimportant items in your life. If you are content to enjoy a night in with your spouse, don't go out two or three times a week just because Facebook is telling you that everyone around you goes on date nights. And you don’t have to feel like it’s a sacrifice either. After all, every dollar you save ends up benefiting you as well. If setting aside money for the future is an important goal for you, then the money you save from the overpriced drinks are just being invested and going towards a comfortable retirement.

Looking at your spending in terms of your values, priorities, and goals can help you see where you are inconsistent. It will also help you develop a plan for overcoming bad spending habits. Once you decide that you have enough stuff and that you want to change, you can start getting your money to work better for you. The good news is that because the expenses you are cutting out aren’t really that important to you, you will feel like it’s less of a sacrifice when you are piling that extra cash flow towards things that do matter to you.

I recently moved and we inherited the TV from the owners who sold us our new home. Before that, we were using a TV from 12 years ago and we bought only one since we moved into that place. Both units aren’t top of the line models, but they were big enough and work just fine. I could’ve spent my hard-earned dollars upgrading our screen every couple of years like many of my friends, but having the latest model just isn’t important to me. I just don’t care that the screen is curved, that my movies run at 4k resolution, or that the black is truly black in the corner of the screen. Instead, I’ve been saving and investing that sum and the few thousand dollars I’ve saved over a decade of not buying the newest TV has turned into a tidy sum - a five-figure sum in fact.

What IS important to me is to have the financial flexibility to retire early one day. By not buying TVs like how others do, the money I saved from that one expense already covers what I would make in exchange for a few months of work. There are also countless other expenses I’ve skipped because they just aren’t important to me. As a result, I have amassed an extremely healthy nest egg.

One day, I would retire early and everyone would ask how I was able to pull it off. I would tell them it’s because I never continually upgrade my TV. It would sound ridiculous, but it would be the absolute truth.