Mindfulness has been a buzzword for quite some time now, and it has also become a multibillion dollar industry. The practice focuses on developing awareness through a regular practice of being in the present, which can lead to calmness and mental clarity. Meditation and other mindfulness practices have positive health impacts, but can being more mindful also help you to save money?
Benefits of Applying the Mindfulness Concept to Our Daily Life
The absence of mindful decision making can impact all facets of your life. For example, research suggests that we make 200 decisions about our food intake everyday, though many of us probably cannot recall all of these thought processes. If we are not conscious of what leads us to make food selections it is reasonable to expect that we are also overlooking financial decisions. Furthermore, mindful living may help to put financial decisions into perspective. Through mindfulness, we learn to observe and be conscious of our everyday life. When we are aware of our spending patterns, triggers, and decision-making process, we tend to make wiser choices instead of merely reacting to external forces.
Reducing Expenses with Mindfulness
While creating a strict budget plan is a good method for monitoring expenses, cultivating awareness may have more long-term benefits. It can be helpful to start by understanding your triggers for spending. While, "retail therapy" may actually have some benefits. It can become a financial nightmare if you spend beyond your means. Furthermore, research suggests that consumers that are stressed spend up to 15 percent more than those who are not.
The quick calculation in the table above suggests that the average household paying hundreds of dollars extra per month if they frequently shopped while stressed. Therefore, being a more conscious and stress-free shopper can truly help you save a significant amount of money, especially over the course of several years.
Create a Thoughtful Savings Plan
On top of avoiding unnecessary expenses, being thoughtful about your savings can help you better plan for future expenses, such as long-term retirement funds or funding a dream vacation. To make this possible, it is helpful to start small and create a habit of saving small amounts regularly. For example, by saving just S$0.50 per day leads to accumulated savings for S$183 over a year, which could help pay for a vacation or a nice dinner out with friends.
Furthermore, making a thoughtful retirement plan can help individuals accumulate a significant amount of funds over the long-term. This is especially due to the power of compounding interest. This is illustrated in the example in which one individual starts saving for retirement earlier than two other individuals, and ends up with more money even though this individual is saving slightly less each month. In our example, the individual that starts saving at a relatively modest rate of S$500 per month will have more saved for retirement than those that contribute much more later in life. The point of this example is to encourage individuals to avoid putting off their retirement savings and to come up with a logical, well-thought out plan.
Confront Debt Problems
Another key aspect of mindfulness is being fully aware of one's surroundings. When it comes to finances, it's easy to put off thinking about uncomfortable topics like debt. Unfortunately, consumers do not have the luxury of ignoring this issue, as many types of debt can grow quickly and create financial headaches down the line. This is especially true for credit card debt, which typically accrues interest at about 25%.
For those that don't have debt, it's easy enough to set a plan to repay credit card bills each month and avoid accruing interest charges. However, for those that already have a significant amount of credit card debt, this problem can seem insurmountable. Thankfully, there are a variety of options for repaying debt without earning such high interest rates. For example, the best debt consolidation plan charge effective interest rates of 7-8%, which are significantly lower than the rates charged by credit card issuers. By using a debt consolidation plan, individuals can repay their debt over a longer period of time without accruing too much interest. Alternatively, balance transfer loans offer interest-free periods (usually 6-12 months), which can help those with limited amounts of debt repay their balances in a shorter period of time. Either way, the key is to confront your financial circumstances head-on and to avoid putting off this uncomfortable topic.
Creating a Stable Foundation
Mindfulness practice is all about developing a state of consciousness and self-awareness. It is not necessarily a mystical practice, rather a practical one that is applicable in many facets of our lives. If we eat mindfully, we are less likely to gain weight and if we speak mindfully, the chances of conflict will be greatly reduced. These are all benefits of cultivating mindful living. If we could adopt this life-changing practice in our way of spending and saving, it is possible to maintain healthier finances. Sticking to a budget, knowing your own spending triggers and even doing research before buying a big-ticket item can all be effective ways that can create a more solid financial foundation for ourselves.