top of page
MM Logo Update Outline.png

Mindful Spending

we spend more when we aren't aware of our spending

❝Beware of little expenses: a small leak will sink a great ship.❞ -Benjamin Franklin

As we walk into the restaurant, it feels cold. It's hot outside, and the humidity is thick, so the sandwich shop has its air conditioning on high. It's 1995, and my friend and I are getting some lunch. Since he paid last time, I'm picking up the tab today. When it comes time to pay, the cashier tells me that I owe $6.23. I reach in my pocket, and I pull out a $5 bill and lay it on the counter. I look to see if I have any $1 bills, and I don't find any, so I have to pull out another $5 bill. I happen to have a quarter in my pocket that I give to the cashier so that I can get 2 pennies back instead of a bunch of change. The cashier gives me my two pennies along with four $1 bills. After I put my change away, my friend and I eat our lunch before enjoying the rest of the day.

Five years later, I go into the same store on my way to class for a quick bite. When it comes time to pay, I'm told I owe $4.25. I don't have any cash on me, but I do have my checkbook. I pull up my checkbook, and after writing the date and the restaurant's name, I write “4.25” in the box, followed by “four and 25/100” in the line below it. Then I write “4.25” again in the register to keep track of my balance. The cashier accepts the check, I eat my lunch, and I head to class.

Five years later, I go into the same store while I'm in town visiting my family. I order my sandwich, and when I get to the cashier, I give her my card, and she gives me the slip to sign with the total on it. I glanced at it, and it was $5 and change. I sign it, she gives me my receipt and my sandwich, and I go about my day.

Five years later, I go into the same store with my brother. After ordering my sandwich, I give my card to the cashier and grab my sandwich. I don't sign anything, and I don't get a receipt.

Five years later, I have an app on my phone to order from the sandwich shop. Instead of going to the store, I pick up my phone, tap a couple of buttons, and in about 30 minutes, the sandwich arrives at my door.

In 1995, I knew exactly how much I was paying for that sandwich. I had to count my money and hand it over to somebody who then gave me different money back. 20 years later, when I ordered the exact same sandwich, I couldn't tell you at all how much I paid.

That's not an accident.

we lose the ability to be aware of our spending


If you are anything like me, you don't enjoy pain. Humans are very good at avoiding pain. Some say that pain hurts us more than an equivalent pleasure would make us feel good. Naturally, if there's pain involved, we will not engage in that activity if we can help it. If there is no pain, we are more likely to engage in that activity.

There is usually a pain associated with spending money. We have to part with our money in that stings. This is called the pain of paying. The pain of paying simply says that we will spend less when we are aware that we are spending money.

The flip side, though, is that we will spend more when we are unaware of how much we are spending. It makes sense, then, that retailers and marketers would make it very easy for us to spend our money. The more friction they can get rid of, the more likely we will be to make a purchase, and when we do purchase, to purchase more.

we do less of what hurts - including spending


Mindless spending happens when we are unaware that we are spending; when we don't have the pain of paying. Sure, we kind of know that we are transacting, but we don't really know the extent to which we are spending our money. Mindless spending is a fast track towards letting life happen to us and being controlled by our money rather than being in control of our money.

mindless spending is when we are unaware of our spending


There are many popular ways you may have read that can reduce our spending. Proponents of these strategies will tell you that they work wonderfully as long as you follow them. It might even spin some story about why it works. Here are some of the tactics.

Using only cash: If you stop using credit cards and put away your debit card, you will only be able to spend cash (unless you still have personal checks with you). By using cash, you add friction to your spending. You have to go to an ATM or the bank if you run out. This friction will help you reduce spending.

Putting your cash in envelopes: The next tactic takes this to the next level and asks you to not only just use cash, but to take all of your cash and divide it up into separate envelopes. Each envelope has a specific purpose. Once you run out of money in that envelope, you can't spend any more money in that category.

Freezing your credit cards: Another tactic is to put your credit cards in water and put that water in the freezer. The idea is that when you have an impulse to make a purchase, you have to go get the credit card out of the freezer and wait for it to thaw before you can use it.

Tracking your expenses: Another popular tactic is to have you write down or otherwise record every single time you have an expense. If you went to lunch, you write down the place and how much you spent. If you lend somebody $5, you write down that $5 loan. If you get gas, jot it down.

Some people are very passionate about one or more of these strategies. You might even see arguments about which one of these methods is better. In my opinion, this is wasted energy. We don't have to wonder why they work because we already know why they work. They reintroduce the pain of paying.

some strategies work to reduce spending, but the reason is the pain of paying


Anything we can do to reintroduce the pain of paying into our spending will help us become more mindful of our spending. When we are more mindful of our spending, we will spend less money. It's that simple.

This is why I don't propose any specific tactic. Everybody is different. For some, going to cash is a great strategy. For others, using cash prevents the transaction from going into the personal finance system that they use. Still, others are worried about the risk of carrying around a bunch of cash. The trick is to find something that will work for you.

reintroducing the pain of paying will bring spending back into awareness


While I don't propose any specific tactic, I do have some favorites. My favorite way to become more mindful of our spending is to reconnect our financial decisions, including spending decisions, with our financial purpose. Financial purpose is the reason money is in your life. For most of us, if our basic needs are being met and survival isn't at the top of our minds, we don't technically need more money - in the strictest sense of the word "need." You could sell everything you own and move to the cheapest part of the country or even to a country that has a lower cost of living, and you could survive. If you're not doing that, why? What does your money need to do for you?

Once you know what your money needs to do for you, then you can start to view all of your transactions through the lens of your financial purpose. It helps you redirect your spending and make sure you're making purchases with intention.

connecting with your financial purpose is a great way to spend mindfully

The pain of paying has all but gone away in recent times. This is not an accident, and you're on your own to reintroduce the pain of paying. Anything you can do to reintroduce the pain of pain will help you make sure that you understand the tradeoffs of what you're about to do and help you make sure you actually want to make this transaction.

Reintroducing the pain of paying helps you spend more intentionally, thereby helping you to live more intentionally.

You get one life; live intentionally.

With gratitude,


If you know someone else who would benefit from reading this, please share it with them. Spread the word, if you think there's a word to spread.

Related Money Health® Reading
References and Influences

Ariely, Dan & Jeff Kreisler: Dollars and Sense

Hanh, Thich Nhat: You Are Here

Wallace, David Foster: This is Water

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.


Join over 1,745 other subscribers.

No Spam - Just new articles sent to you every Thursday.

Popular Articles

bottom of page