I was intrigued this morning as I met some friends at a local bagel shop for breakfast. After paying over $6.50 for a bagel with cream cheese and bottle of juice, I realized how expensive this establishment was for some of the regular patrons. I watched a father buy his sons breakfast before school, moms in workout clothes dropping in for quick jolt of caffeine before hitting the gym, and a few high school kids walk out with coffee mugs the size of milk jugs.
As I sat in astonishment at the number of people that patronized this local shop at 6:30am, I wondered how many of these folks came here everyday. From the familiarity of exchanges between the clerk and the customers, I supposed this was routine for many. I started to calculate the monthly outlay of the “average” bagel shop customer when it hit me that maybe I was missing the point.
I regularly speak to my clients regarding cash flow, and one of the most important elements we discuss is purposeful spending…..spending your hard earned money on things that really matter or bring joy into your life. By developing a budget that establishes joyful spending, we can create a healthy relationship with our money and not an angry, oppositional, or frustrating encounter every time we open our wallets.
Purposeful spending applies to all economic classes from the wealthy to those with little. The wealthy may enjoy purposefully spending through charitable giving, while those with less may simply enjoy the time together with the family at a local restaurant.
How it Works
Creating a purposeful spending philosophy has to work hand and glove with fiscal responsibility. Obviously, the necessities of life must be paid first followed by saving for the necessities and joys of tomorrow. What’s left over is often called discretionary funds. These are the funds in which purposeful spending evolve from. I feel it is important to understand that many of our purchases are choices, especially discretionary purchases. Focus on the areas of your spending that bring you joy and work on reducing spending in areas that do not. I often encounter families that over-spend in areas that are in opposition to their life goals or just can not be justified.
This brings me back to the bagel shop. Maybe I had the picture distorted, for I suppose the father may work long days and enjoy the focused time with his sons every morning. It could be their tradition rather than a financial drag to their monthly budget. Maybe the moms that walked in wanted someone else to make the coffee once in awhile and enjoy the time away from the hustle and bustle of their morning routine. These thoughts would certainly qualify for purposeful spending.
What about the teenagers? Well, I don’t pretend to imagine what their thoughts are…who knows? That’s above my pay grade and certainly fodder of a different professional.
The key to purposeful spending is to align discretionary outlays with sustainable joy and happiness (experiences with friends and family)…not purchases that generate short term bliss (keeping up with the Jones). Developing a spending mentality that enables you to feel good about what and where you spend your money can lead to a new level of financial freedom.