5. Focus on what matters.

Narrow the choices, widen your mind: fewer things, more sense.

Last week, we sorted out expenses in two types: those you can control and those you have committed to pay.

But those we can control… often get out of control! Question: what is hard to control? Our wallet or our mind?

Today let’s focus on our brain and how we decide. You can try this experiment: every morning you drink a juice, exactly the same quantity. Then one day, you pour yourself a bigger one.

Will you stop after you have drunk your usual quantity? Most likely, you’ll drink it all, without even noticing. This is the same with our income. If we get a bigger one, we just tend to spend it. Why?

Our brain tends to focus on short-term: that’s easier. It takes a lot more effort to think long term. So we tend not to do it. Many of our decisions are emotional… because it takes more effort too to be rational. What kind of financial decisions does an emotional short-term brain take? 1) when there is an income, spend it. 2) buy things we like first. … forget about longer term less exciting expenses… and gasp in horror when we realise we have run out of money for them. 

How can we work on our brain to be more long term and rational? 

We’ve started already: all these lists (future expenses, debts to pay back) help us remember the long term… writing a shopping list and sticking to it or keeping our future expenses in our wallet can help too. Setting limits like calculating our daily spending limit or using envelopes or carrying little cash too helps limit the scope of what emotions can decide. Tracking also forces us to think factually and rationally of what we do with our money. 

Next week, we will look at budgeting which will help us think long term and set limits.

We can go even further… from being more long-term and rational to becoming more mindful and making sense of our financial life. When we buy, we just focus on the things ( or services) that we purchase. What shall I buy? When we discuss with friends, we ask: what did you buy? Our consumer society makes us see life as a stack of “whats”… but “whats” are like sugar – it is addictive and we never have enough. So when we see a new thing, we want it, and this one too, and that “what” as well … maybe that’s not the right question because it never has a satisfying answer. 

And if we replace “what” by “why”? Why shall I buy this? To feed my body, to be healthy, etc… and if there is no reason we can think of, maybe it will not bring anything to our lives and there may be better ways (and “why’s”) to use our money. This is the first step to being more mindful: whenever you buy something or spend, think ‘why’, not ‘what’. That also helps reconcile our financial life with our whole life: we spend or buy or save or give because of a purpose, because it makes sense in our life. The more “why” we ask ourselves, the more harmony it brings to our life because there are fewer and fewer conflicts between our spending behaviour and our life values.

As we get more mindful in our money management, other questions come to mind: these things we buy… where do they come from? Who made them? Our purchases link us to the other human beings who made them, transported them, sold them, the earth it comes from. Things become more valuable and we feel less ready to dispose of them and rush to the latest fashion – would you discard your child’s drawing? A super bargain “what”… looks different when we try to see how its price impacts others. Instead of buying three of them (they are so cheap!), we may prefer the one locally made in a workshop where workers are treated with dignity and earn a living salary; it may be more expensive, but we have a better understanding to whom our money goes. Why… not what, makes us behave like full human beings, not just consumers.

Narrow the choices and widen your mind. Fewer things, more sense.

Let’s put this into practice

There are several ways you can practise being a more mindful spender. It depends on your spending pattern and what you value.

1. Know yourself: if you have tried the juice experiment, you can try others to discover how our brain takes decisions. For example you serve exactly the same quantity of food in a small plate or bowl for several days. Then put the same quantity in a much bigger bowl or plate: don’t you feel it looks smaller? And you even feel less full after eating it? Being more aware of how your brain works makes you more aware of how you can be “tricked” or influenced when you buy. Shops and marketing know your brain more than you do… If you want to go further, here are two very good books on that topic:
   1. How We Decide by Jonah Lehrer
   2. Thinking, Fast and Slow by Daniel Kahneman
2. Stop, think, decide: whenever you are about to spend, don’t rush: take a breath, pause, think… why? not what? How will this expense change your life?
3. Narrow the choices: write your shopping list at home then stick to it.
4. Envelopes: if you mostly use cash, look at how much you decide to spend on for example food, or books, or going out (any expense where you find it hard to control yourself), put the amount in a separate envelope on which you write “food”, “books” etc… and only spend from that envelope.
5. Read the labels: where does this product come from? Which company made it? Get more information.
6. List your life values: are your expenses aligned with your values? For example, if you value education as one of your top values, and you realise you spend more on clothes than books, you may feel frustrated.
7. Look at your tracking: you know what you spend… try to figure out to whom the money goes.