A philosophy of spending
Your spending is a direct consequence of your behaviour. Changes in your spending require changes in your behaviour. Your behaviours are directed towards satisfying your needs and wants. Your basic needs are driven by the necessities of survival. Your wants are driven by your emotional desires. Your emotional needs are modified by your purposes in life. Those purposes in life are, in turn, generated by your emotional, instinctual and survival drives. I speak not of the grand philosophical purpose of life but of your ultimate purposes that drive the way you manage your money.
Your ultimate purposes may be keeping up with the Joneses, appearing successful, living as well as possible or contentment with the basic material comforts. You purposes may be modest or insatiable.
The only way to change your spending is to change your behaviours. Sustainable behavioural changes must satisfy your emotional needs and your life purposes. A thorough overhaul of your spending habits must therefore look at your behaviours, your survival needs, your emotional desires and your life purpose.
How do I evaluate my spending?
First, examine each of your expenses to identify the behaviour that generated the expense. Second, examine the behaviour to identify the needs and wants driving that behaviour. Third, your perception of the needs and wants satisfied by this purchase point you to the emotional desires generating those needs and wants. They are perceived benefits because they satisfy your needs and wants. Those emotional desires are framed in the context of your purposes in life. That, in a nutshell, is how you may evaluate the merits of your spending.
How do I change my spending?
This requires action. You will be preparing a budget however you must first understand exactly what drives your expenditures. A budget is one part paperwork and 19 parts behaviour.
Write down every expense as you make it to ensure every expense is identified. Consider how each expense satisfies your needs, wants, emotional desires and purposes. Prioritise each one by urgency and importance. If it is insufficiently important consider dispensing with that expense. If it is urgent ask yourself how it could have been prevented from becoming so urgent. Examine the perceived benefits of each remaining purchase and consider alternative ways of satisfying those needs and wants. Here you seek more economical ways of satisfying your emotional desires and your life purposes.
In the evening, write down your planned expenses for the next day and that is your budget for the next day. Next day, write down every expense. In the evening review each expense to frame a budget for the next day. Look at all of the amounts you spent that day to seek wasteful patterns of expenditure. Consider the reasons for any expenses that differed from your daily budget. Do that for seven days and then prepare a budget for the following week. Record and consider your expenses each day for the whole week. Prepare another budget for the following week. At the end of the third week you should have broken some bad habits and be saving more money. You may then prepare a budget for the full year which will also include your periodic expenses.
All the while you must consider your ultimate purposes and whether they need to change. If you seek to keep up with the Jonese is that really worthwhile? If you wish to appear successful how much will you spend and how much debt will you incur? Will you destroy the reality of success by going deeply into debt to create the illusion of success?
Would you like to know more of the process of reviewing spending?
I have prepared a booklet setting out how to set your weekly budget so that you will save money to invest. The basic concepts, as set out above, are treated in more detail in my booklet. my booklet also contains a detailed walk through of implementation of this process for a man on a low wage who was thus able to increase his savings. He made his first investment a few months later. This booklet is a PDF file of 30 pages setting out a detailed program over 3 weeks to knock your finances into shape. You can buy it from Gumroad by clicking this link: gum.co/ooetf