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Financial Mindfulness

financial awareness
❝Sit, and know you are sitting...Breathe, and know you are breathing.❞ -Joseph Goldstein

I'm sitting on my couch listening to a guided meditation by Joseph Goldstein. I've been meditating for over five years now, so I'm pretty familiar with mindfulness meditation. Mr. Goldstein's approach is slightly different from what I'm used to.

Mindfulness meditation, at its core, is about paying very close attention to the contents of consciousness. That includes sounds, feelings, thoughts, emotions, and even bodily sensations. People who are advanced are able to feel the raw sensations of, say, anger as patterns of energy in their bodies.

The meditation teachers on the apps and videos that I've used so far have done a pretty good job teaching me this. In the earlier stages of learning, I was taught to pay careful attention to what it feels like to breathe. Later, the lessons turned to paying careful attention to what it feels like to sit, to feel what my body feels like while it's resting in space.

Joseph Goldstein has a way of teaching this that I have not heard before. Instead of instructing me to pay close attention to my breath, he simply said to breathe, and know that I'm breathing. Instead of telling me to pay attention to the sensations of sitting, he instructed me to sit, and know that I'm sitting.

This distinction made a lot of sense to me. It taught me that to live mindfully, it's important to understand that whatever we do, know that we're doing it.

This insight can apply to our finances.


Mindfulness meditation is simply practice for living mindfully. It trains our awareness, attention, and concentration. The word mindfulness tends to be used in many ways lately, so its meaning can be all over the board. It's helpful to think about it in the following way: the opposite of being mindful is being mindless.

To demonstrate this, ask yourself what you're thinking about right now. Most of us live our lives talking to ourselves. In fact, if we had a friend following us around that talked to us as much as we talk to ourselves, we would hate that person. Yet, we do it all the time. We think without knowing what we're thinking; we're constantly lost in thought.

Mindfulness helps break that pattern. There's nothing wrong with thinking; thinking is necessary. The problem is when we think without knowing that we're thinking.


Financial Mindfulness

We can apply the same idea to our financial decisions. Too many of us make financial decisions without knowing that we're making financial decisions. We get to the end of the month and wonder where our money went. We accept jobs, promotions, and projects at work without fully understanding what we have to give up to get those. We use our money in a way that doesn't support our values. We make purchases we think we're supposed to make, either because we believe other people judge us or because we believe they will make us happy.

Good financial decisions come to us when we are aware that we are making financial decisions and aware of the consequences - both good and bad - of those decisions.

financial mindfulness

The Pain of Paying

In the book Dollars and Sense, the authors talk about a concept called the pain of paying. The pain of paying is the sting that we feel when we part with our money.

It used to be that we were very aware of how much we were spending because there was a significant amount of pain associated with it. When we paid with cash, we had to physically count out enough money and hand it over to somebody who would take it out of our hands. Later we would write checks. When you write out a check, you write the amount you are spending at least two times, and sometimes three. Now, we pay by tapping our phone or a card to a reader, we don't get a receipt, and otherwise have no idea that a transaction just happened. This is not an accident. Living things avoid activities that provide pain, and that includes humans. We will spend less if there is more pain of paying. If retailers and marketers can get rid of the pain of paying, then we will spend more.

pain of paying

Reintroducing Financial Awareness

It's common to see canned personal finance advice that tells you that you should only spend cash, that you should put that cash into an envelope, or that you should track every penny. These techniques work, and that's why they make it onto cheap personal finance articles. The reason these hacks work, though, is simply because they reintroduce the pain of paying. So anything we can do to become more aware of our spending and our financial decisions will reintroduce this pain of pain.

I learned from author Carl Richards a simple trick you can use to reintroduce financial awareness. Since we are largely unaware of how much we are spending, the first step is to bring that spending awareness back into consciousness. Get in the habit of asking for your receipt or looking at your email confirmation. Then, just simply say to yourself that dollar amount and what you spent it on. For example, I might say, "Derek, you just spent $6.25 on a sandwich; that's interesting." The point here is not to judge yourself, interpret why you spent over $6 on a sandwich, or try to deprive yourself. You are simply introducing awareness. Over time, this habit will become automatic.

It can be helpful to ask yourself a series of questions before buying something. A great question to ask yourself is: do I really need this? The beauty of this question is that you can ask yourself four different times by emphasizing a different word.

Do I really need this?

Do I REALLY need this?

Do I really NEED this?

Do I really need THIS?

This increases the space between your impulses and your purchases. It helps you slow down so that you're making your financial decisions intentionally rather than reactively.

pain of paying

Financial Purpose as Your Anchor

A simple question that is deceptively hard to answer is, "what is your money for?" Once your basic needs are met and you have some comforts, you technically don't need to earn any more money (in the basic sense of the word need). But you do make money. Why?

This question will be different for everybody. What is your money's purpose? Understand that you only have a finite amount of time on Earth. How do you want to use the money that you have in order to live your life?

Once you've defined what your money is for, you can use that as the filter through which you view all of your financial decisions. This is not an exercise in deprivation or restrictiveness. It is simply making sure that you are using your money in a way that adds value to your life, as you define it. Some transactions will make it through this filter, and that's good because those matter. Your purpose filter will also screen out many of those transactions that don't really add value to your life.

financial purpose

Too many of us use our money unconsciously. We are unaware that we're making decisions. Introducing financial mindfulness into our lives will help us live less reactionary.

So spend, and know that you're spending. Make financial decisions, and know that you're making financial decisions.

You only have one life. Live intentionally.

Related Money Health® Reading
References and Influences

Ariely, Dan, & Jeff Kreisler: Dollars and Sense

Ben-Shahar, Tal: Choose the Life You Want

Delucca, Gina, & Jamie Goldstein: Positive Psychology in Practice

Goldstein, Joseph: Mindfulness

Hahn, Thich Nhat: You Are Here

Haidt, Jonathan: The Happiness Hypothesis

Hanson, Rick, & Richard Mendius: Buddha's Brain

Harris, Sam: Waking Up

Hefferon, Kate, & Ilona Boniwell: Positive Psychology

Millburn, Joshua Fields, & Ryan Nicodemus: Essential

Richards, Carl: The Behavior Gap

Scott, SJ, & Barrie Davenport: Declutter Your Mind

Note: Above is a list of references that I intentionally looked at while writing this post. It is not meant to be a definitive list of everything that influenced by thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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