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A lot of decisions we make with our finances are based on the notion that we deserve something, and that we should have it at any cost. And you know what, we are right.

We work hard, and I believe we deserve to have something to show for it. Where we are wrong, however, is the ‘at any cost’ part.

Conscious spending can help you achieve this without feeling guilty.

According to Ramit Sethi, conscious spending is simply laying out a plan in advance for how you will spend your money. This includes bills, groceries, entertainment, investing, saving, hobbies, etc. By laying it all out in advance, you are making deliberate decisions with your money.

For many, just laying this all out in advance is a financial coup.

It can also mean slashing spending in areas you don't care about in order to spend big where it matters.

This principle of conscious spending came to me at a time when I was a big fan of Dave Ramsey. Dave would never let me go on a vacation given my current debt situation (no consumer credit, only student loans).

I understand completely what he is saying, but it never felt quite right. I feel that Ramit’s advice is a bit more realistic given our human nature to want rewards.

How to Implement Conscious Spending

Determining where you spend your money should be done after a careful determination of your goals and a deep assessment of where you stand with your finances.

Are you tens of thousands of dollars in consumer debt? If so, you probably shouldn’t be spending thousands more on a European vacation. But if you want to make a vacation a few years down the road a priority, conscious spending allows you to set aside a little each month, using the power of time to help you.

As long as you are doing things right (paying off debt, or if you don’t have any debt, saving a good chunk for retirement) there should be no real reason to feel guilty for spending lavishly in the areas that are important to us. There should be some reward to working hard and being diligent (and I’m not talking about the “reward” that comes after 40 years of work where they allow you to fade away slowly into retirement).

If there is no payoff, then why should I care? If I can’t reward myself with a nice vacation every two years, then what the hell am I working for anyway?

Let’s break down my family’s current situation: We have paid off probably $90,000 in consumer debt over the last ten years. Sometimes we were focused, sometimes we weren’t. When we got serious, we made rapid progress, and we will be debt free (minus house) in about 6 months.

I mentioned our upcoming mega European expedition in a post on my goals for 2012, and a commenter pointed out that getting out of debt and taking a European trip were two conflicting goals. And for some people, he’s right. In our situation, skipping the trip would bring us to debt freedom 2 months sooner. However, skipping the trip could mean that an opportunity is missed, and it would be a few more years before we could go again. I haven’t been on an international trip in almost three years, and it’ll be almost 5 years for my wife.

Postponing debt freedom by two months is something we chose to do as a priority. We view it as a positive tradeoff. Travel is the only thing I can spend $5000 on for two weeks of adventure without feeling guilty. In fact, I feel guilty if I don’t do it.

Conscious spending allows us to have these moments of fun without feeling like a failure. Maybe for you it’s attending a comic book convention once a year. If you save up in advance and work it into your monthly budget (and aren’t otherwise in financial meltdown), you should be rewarded for your hard work and progress.

When we decided to go on this trip, we made the decision about a year in advance. I had just gotten a raise, and we decided to pretend that the money never even came. What that means is that we earmarked some of it for our daughter’s private school tuition for next year (2012), and some for a European trip.

For us, we had to make something other than money a priority. Our reward is international travel. Nothing inspires me more than the feeling of adventure and self-reliance that I get from international travel. This is part of the reason why I work so hard – I want to experience the world BEFORE I’m 70 years old and decrepit.

How We are Using Conscious Spending to Take this Trip

1. By saving in advance
2. By not accruing any new debt to make it happen (cash-flowing it)
3. By not deviating from our set monthly budget and savings priorities


4. We have no credit card debt or car payments
5. Student loans are almost paid off (and will be soon after we return)
6. We have been sticking to a written monthly budget for almost two years

If you can save for your dreams and guilty pleasures by using the first three methods above (and you are using the last three steps to dictate your timeline), you should not feel guilty at all.

You have a plan, which puts you ahead of most people.

Like I said, even if you are in debt, you shouldn’t feel that you can’t put a small amount away each month on a longer timeline. Getting out of debt, if that is your priority, should stay your priority, though.

Can This Work for Everyone?

Conscious spending is something that should probably be practiced by anyone who is looking to take control of their finances, live on a written budget, or automate their finances. Whether you are in debt or not, you should be consciously spending (unless you are filthy rich and don’t care, which is fine).

But WHAT you spend on and HOW you spend depend on your situation. If you are deep in credit card debt and frustrated with trying to get out, you should probably skip the expensive vacation this year.

But if you are well on your way, have an emergency fund in place, are sticking to a debt payoff plan, and have been diligent for quite some time (I’d say at least a year), you shouldn’t be afraid to budget for the fun stuff.


Personal finance is all about breaking rules. Though you may read a lot of articles and blog posts about DO THIS and 5 THINGS YOU MUST DO NOW, it’s easy to see that a lot of this advice is unconventional. It’s about breaking the rules set by banks, money lenders, and advertising agencies.

Feeling guilty about spending (when done smartly), in my opinion, is one of those personal finance rules we can stand to break. Conscious spending can get you there.

Trust me, your life will thank you.

Do you practice conscious spending?


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