When we think about money, we tend to think in terms of the doing, don’t we? Of spending, saving, budgeting, and investing. We use money to ‘do’ other things: to buy things, generate wealth, or provide care, and as a result our focus is on the thing that we use money to do. Money is the means, and the result is what we buy or what we can afford to enjoy, so that’s what we concentrate on.
When we think about our family lifestyle, once we’ve identified what our ideal result looks like, we tend to focus on the How. How will we afford this? How can we save enough to feel comfortable? How can we plan for parental leave, childcare, schooling?
Whilst these are all great questions, as a financial coach, I encourage people to take a step back from this question. By focusing on the How, we overlook the Why. Our Why is, in simple terms, the reason that we do things – our justification for spending, saving, and budgeting. It is the motivation we use to achieve our financial goals.
In truth, many of us are realising more of our money goals than we think. The key to achieving them is adopting a mindful approach to our spending: being consciously aware of the Why in our decision-making.
I often play a game with my clients to help them re-find their Why. The benefits of it are enormous, and it is very simple: by categorising your expenses, you challenge yourself to find the Why for each, questioning whether you are spending or saving, budgeting or investing, in alignment with, and in a way that moves you closer to, your goals for your family.
In the Money Mindfulness Game, you will need three months’ worth of bank or credit card statements, a calculator, three highlighters, and a pen and paper.
The aim is to categorise as many of your expenses on the statement as possible into one of three categories: Conscious Spending, Mindful Spending, and Intentional Spending. Let me explain the different categories to you.
Conscious Spending is our ‘foundation’ – what most of us would categorise as everyday spending. It includes anything necessary for you to live, so include rent or mortgages, groceries, water bills, electricity etc. in this category. Within Conscious Spending we know we aren’t moving towards our family goals – these expenses are simply the things we need to pay to live our current life and to go to work or run our homes.
Mindful Spending is the next ‘layer’ in our money pyramid; once added up this probably totals less than Conscious Spending. These are all expenses that you are currently ‘choosing’ to make each month to enjoy life. This might include a TV package, membership to the National Trust or Gym, or a food delivery box.
Finally, your last category is Intentional Spending. Of your remaining transactions, I want you to highlight those which you made deliberately to move you closer to your family financial goals. Examples might include regular savings amounts, investment direct debits, paying for services or help, or the cost of school fees and tutors. Everything that you place into the Intentional Spending category must be a proactive money decision that will help you on the path to achieving your goals as a family.
Once you have finished categorising, the real work begins. Look carefully at whatever you haven’t highlighted. Ask yourself why. Why did you spend that, what does it help you achieve? If the answer doesn’t leave you satisfied; if it doesn’t fit with your future and family values, then question it. Ask yourself whether it is helping you or hindering you in living the life that you want, in the way you want it.
The same goes for your Mindful Spending category. Remember, these are expenses that you are choosing to make each month to improve your current lifestyle. You aren’t aiming to cut out every mindful expense, but to return to your Why and ask what the benefit of it really is.
In modern society we are often rushed – both physically and mentally ̶ and that goes for our finances too. The way we buy, spend and save is designed to create a sense of urgency in our brains – to short-circuit intentional spending, to avoid us questioning the purchase or asking ourselves what our Why is.
The truth is, in planning our family finances the Why is just as important as the How. The Why reminds us to focus on our goals. It encourages us to keep our family future uppermost in our decisions, and it keeps us on track. It is one of the most helpful tools a financial coach can teach you when it comes to designing your family future, and I hope it will help you achieve your financial dreams.
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Charlotte Lidstone lives with her husband and daughter on the south coast, near Ringwood. Charlotte worked as an investment researcher for eight years prior to having Rosalind. Becoming a mum and going through that transition from individual to parent was the catalyst for creating her family financial coaching service. Charlotte loves to bake. She recently went both gluten-free and dairy-free due to having Crohn’s disease, so spends a lot of time coming up with new and interesting baking ideas.
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First published in issue 74. Accurate at the time this issue went to print.
