How Mindfulness Can Improve Your Money Habits
Mindfulness and money may not seem like they naturally go together — that is, one is generally associated with "new age" practices, while the other is more linear and logical.
However, melding the two may yield some surprising results.
What is mindfulness?
Simply put, mindfulness is the state of being aware in the present moment. It is a translation of the word sati, which is a key part of Buddhist teaching. Meditation is a technique used to develop a practitioner’s mindfulness.
It might sound overly simple — except when you consider what happens when we ruminate. From time to time, everyone goes down mental rabbit holes that contribute to anxiety, depression, and despair. Through these destructive thought patterns, we lose touch with what’s actually happening now. We worry about the future instead of seeing what’s right in front of us.
Staying mindful is a way to anchor your thoughts in the present, stay focused and aware, and maintain balance in your life. Here are just a few ways you can use it to improve your money habits.
See also: The 5 Most Profitable New Year’s Resolutions for Millennials.
It helps you pay attention to your spending
Has this ever happened to you? You leave the house, intending to pick up a quart of milk. You have $40 in your pocket. When you come back, you realize you’ve spent it all.
We’ve all spent a lot more money than we planned to before. Simply paying attention to what you buy can help you break that pattern.
One way to do this is to track spending. It’s basic, boring financial advice — but it really works. Every time you buy something, write it down. At the end of the week or month, take stock of what you buy. You may find some unexpected patterns you can change.
It helps you balance reason and emotions
Some of our purchases are carefully thought out, but our emotions also drive us to spend. Mindfulness is all about maintaining a balance between reason and emotion.
Say you need to buy a car. You’re torn between the practical, dependable car and a flashier, sexier model — the kind you’ve always wanted.
Being mindful of that purchase means weighing the pros and cons. Think about gas mileage, dependability, cost of repairs, and insurance, against how happy you’d be following your heart instead of your head — and whether you can afford it.
Make a list of pros and cons. You can do this both with impulse purchases and with big decisions you have to research, such as buying a car.
It helps you spend purposefully
So many of us spend money in a certain way because it’s convenient — and not because it’s the best financial decision.
Mindfulness helps you become aware of your intentions. So if your intention is to save money, consider whether it makes sense to switch to a new bank that charges lesser fees or look into a credit union — don’t stick with your old bank because it’s convenient.
Purposeful spending looks different to different people. It could mean opening a retirement account or refinancing your student loans so you can build up your savings. Or it could mean buying higher-quality things that will last longer and cost less over time.
Either way, spending intentionally means thinking through what you want to accomplish with each purchase, and taking steps to do that — rather than just leaving these decisions on autopilot.
It helps you break anxious spending habits
Many people use spending as a coping mechanism for depression or anxiety. Buying something shiny and new can give you a tiny shot of dopamine, making you feel better when you’re in a downward spiral. But spending this way can really hurt your wallet.
If this sounds like you, mindfulness can help. Next time you go to a dark mental place and find yourself on Amazon or Etsy, take a deep breath. Check in with yourself. Think about how you’re feeling physically and mentally. Ask why you’re making this purchase.
Mindfulness can definitely help improve your finances by helping you stay focused on your goals, maintaining your intentions, and breaking damaging spending habits. Sometimes, taking the time to breathe and think about the purchase can be enough to break a negative spending cycle—and help you get back on track.
Check out our Refi Ready Calculator to see if refinancing your student loans is right for you.