My Financial Awareness - Don't Give Up Your Latte

The last few years, there has been a lot of emphasis on cutting down expenses especially the little everyday expenses like a morning cup of coffee. By doing this to the extreme, some people are depriving themselves because all the little things that bring them happiness are being cut. When people feel deprived, they are more likely to splurge (on things that they don't really want) without realizing it. Thus, the goal of cutting expenses is actually not saving them any money due to splurging caused by feeling deprived.

We typically make a lot of purchases on autopilot (based on unconscious thoughts). The purpose of a budget is to shift unconscious choices to more conscious choices on where you spend your money. By making conscious choices, you are able to ask yourself what brings me peace, love and joy in my life. These are the items that you should be spending your money on. When you are spending on items that bring you peace, love and joy, you will feel less deprived and have an easier time sticking to your budget.

Unfortunately, many do a budget from the bottom-up. This means that large fixed costs are already in place (e.g., taxes, mortgage/rental costs, transportation costs, etc.) before a budget is created. When all the large fixed costs are added up, 65% to 75% (or more) of your income even before you get to your utilities, food, savings and tithing. This leaves little room for anything else. Thus, normally all we have to cut are the little extras in our lives like the morning latte. So what should you do?

First, a budget should be from the top down. You need to ask what really gives you peace, love and joy? Then build your budget from there. You may find that you are allocating a larger share of your budget to housing or transportation at the expense of the little pleasures in life (a morning cup of coffee or a special night out with your children and spouse). You may not be able to change your budget overnight. Yet, over time you will be able to allocate your budget on things that bring you more peace, love and joy. There should also be room in the budget for unexpected surprises (e.g., increase in heating costs and gasoline prices). This way when life happens, it is no big deal because you are ready for it.

Second, you should really challenge your budget. I just taught a class where a participant initially said that there was nothing in her budget that was not needed. I asked her to challenge that belief. Within 20 minutes she found over $400 a month in expenses which she did not really need and which did not really make her happy. If you think about it, there is very little that we need (food, shelter, clothing, etc.). And, a portion of these items are actually more of a want. We can live on basic foods (rice, beans, fruits, etc.). However, we want to treat ourselves to things like steaks, seafood, ice cream, potato chips, etc.. Just recognize what is a true need versus a want.

Third, you should have a few things in your budget that bring you peace, love and joy. For some, it is the morning latte that gives them joy. They may find it relaxing to drink their coffee at the park or just walking to work. It is about the moment of peace that they get before entering their non-stop job. So, if a cup of coffee gives you happiness, do not deprive yourself of it, as long as it fits into your budget. It does not mean that you need a cup of coffee every day or that you can not make your own. Yet, do not just cut it out and then have guilt for not getting what you want. Note, it is what we focus on that will expand. If we believe we are depriving ourselves, then that is what we will get more of. This is why keeping one or two extra goodies in your budget will go a long way to having more peace, love and joy in your life.

Forth, when creating budget goals, focus on the feelings that you want instead of the actual goal. If you want to find peace by getting away for a vacation, do not focus on the $2,000 vacation that will take years to save for. Focus on what you want, the peace of a vacation. I just had a friend tell me that she had a wonderful weekend getaway that was only a few hours from where she lives. The main expense was a $35 hotel room. For her, she found what she was looking for without needing to deprive herself until she was able to save for that dream vacation. If we focus on the dream vacation, we miss the little things that bring us happiness.

Fifth, review your budget. In this review, look at all the things that you brought into your life that gave you peace, love and joy. We typically forget these things a few hours after they happen and only remember the cost for gas the last time we filled up and thus we feel deprived. The goal is to focus on things that we want to manifest more of in our lives. If we focus on the higher gas prices, guess what we will get more of? If we focus on that little weekend getaway that we just took, it can manifest later into a bigger vacation later on. So each month, look back and see what you were able to do instead of what you were not able to do.

Sixth, look at what really gives you peace, love and joy. You may think that the cup of coffee brings you peace, love and joy. However, it may be the few minutes of peace that you spend before going to work. Instead of buying a cup of coffee and reading the paper for your few minutes of peace, you may be able to get the same experience by sitting out on your deck. We sometimes think that the material object we buy brings us peace, love and joy versus the experience itself. Look at a baby. A baby finds joy in new experiences. As we see, they are just as happy with a new box to explore while leaving the $50 present behind, because it is not the present itself that brings them joy. This is a key step, because if you just cut out the latte, you will feel deprived. You need to first separate the experience from the material object in order not to cut out your peace, love and joy as well.

Lastly, do not overlook your retirement and emergency fund. We typically focus on what brings us happiness in the present moment and forget about what will bring us happiness long-term. Just ask those who have had emergencies, did not save for an emergency fund and needed to file for bankruptcy if bankruptcy brought them a peace of mind.