By Blaine Thiederman MBA, CFP | 08/12/2022

Key Points

• The article explains what financial mindfulness is and how it can help individuals control their impulse spending.
• The first key point is that financial mindfulness involves being aware of one’s financial habits and behaviors and understanding how they relate to one’s emotions, values, and goals.
• The second key point is that impulse spending often occurs when individuals are not fully aware of their financial situation or when they use spending as a way to cope with stress or other emotions.
• The third key point is that financial mindfulness can help individuals break the cycle of impulse spending by encouraging them to pause, reflect, and make intentional choices about how they use their money.
• The article provides several practical tips and strategies for developing financial mindfulness, such as tracking expenses, setting financial goals, and practicing self-compassion.
• The author also emphasizes the importance of seeking support and guidance from a financial advisor or therapist, if needed, to overcome deeper emotional or behavioral issues related to money.

Mindfulness, or the practice of being fully present in the moment and aware of your surroundings, might bring to mind a yoga class or a meditation app. But it can actually be applied to many aspects of your life, including your finances — and can be particularly helpful when it comes to how you spend money. Here’s our founder’s take on the importance of mindfulness when you’re trying to make progress towards your financial goals.

WHAT IS MINDFULNESS?

Mindfulness is the basic human ability to be fully present, aware of where we are and what we’re doing, and not overly reactive or overwhelmed by what’s going on around us.

Mindfulness is a quality that every human being already possesses, it’s not something you have to conjure up, you just have to learn how to access it.

DIFFERENT TYPES OF MINDFUL PRACTICE

While mindfulness is innate, it can be cultivated through proven techniques. Here are some examples:

1. Seated, walking, standing, and moving meditation (it’s also possible lying down but often leads to sleep);
2. Hiking, mountain biking or mountaineering;
3. Short pauses we insert into everyday life;
4. Merging meditation practice with other activities, such as yoga or sports.

You may have done some or all of these at one point in life and didn’t realize how present you truly were while doing them. After an hour or two of hiking, your mind isn’t full of thoughts about work, deadlines, etc. All you’ve thought about was that hike at that particular moment and that’s good for your head. That’s being mindful.

WHY IS MINDFULNESS BENEFICIAL TO OUR FINANCES?

We’ve all experienced stress, problems, obstacles, and challenges in life (some more than others). Some of us have trouble managing this stress and can eat or spend our stress away to regain the feeling of control, again. This may feel good in-the-moment but eating or spending our feelings away isn’t productive at fixing our problem and if anything, only makes things worse.

Without a prudent strategy for managing our emotions and improving how good we feel in life, not only does it make managing our budget, staying disciplined as an investor, and being productive at work harder but it also makes living a happy life harder as well. At Progress Wealth Management, we believe that all financial plans and strategies for enjoying life require good financial behaviors to be successful.

HOW CAN MINDFULNESS BENEFIT YOU? 

At its core, financial mindfulness helps you make strategic rather than emotional choices about your money because it helps to center your mind when you’re experiencing challenges in life. The goal is to feel less anxious about your finances, your decisions and to help you be more present. Rather than erasing your feelings from the decision-making process entirely, financial mindfulness encourages both your brain and your gut instincts to work together.

For instance, when you make big purchases based on your mood, you’re basing it “primarily on your emotions, as opposed to making a more balanced decision,” says Janine Ilsley, a licensed therapist in New York. By detaching yourself from the emotional pull of spending money, “financial mindfulness brings a more harmonious relationship with money matters that unwittingly impact the alignment of your wants and needs.”  

In other words, when you’re being financially mindful, you’re less likely to binge shop as a way to deal with stress at work because you know you’ll regret the credit card bill that comes later.

HOW TO PRACTICE FINANCIAL MINDFULNESS TO CURB SPENDING 

But how do you put financial mindfulness into practice? Ilsley offers these steps.  

• Check in with yourself before, during, and after making a purchase to take stock of how you’re feeling. Be honest with yourself — not judgmental — so you can get a sense of the kinds of purchases that fulfill you the most.
• Plan your purchases in advance, ideally at a time when you’re feeling relaxed and clear-headed. Make a list of purchases you want to make for the next quarter or even the coming year. The next time you’re tempted to buy something, come back to this list to see how the purchase aligns with what you actually need.
• If the purchase in question isn’t on the list, ask yourself, “Will I be thankful I made this purchase tomorrow?” If the answer is no, skip it for now. The goal is to slow down and think critically about each spending opportunity. 

It may not come naturally at first, but the more you put these tips into practice, the more your mindful spending will become a habit. Over time, you may feel it gets easier to stick to your budget — and you may even notice that you’re making a bigger dent in your debt and more progress on your financial goals.