Intentional Spending for Young Lawyers
Executive Summary
Everyone has felt buyer’s remorse. This comes from people spending money on things that they think will add value to their lives and then later find out it did not meet their expectations. When we spend without intention, we are more likely to spend our hard-earned money on purchases we later regret. This doesn’t have to be the way you spend going forward. Intentional spending empowers people to say no to purchases that do not add value to their lives. By intentionally spending, you may find that your life is better, you spend less, and it is easier to build your dream life. First, take time to figure out your goals and what spending is valuable to you, then prioritize these into a list of high value spending categories, and finally start spending intentionally!
It is not often that you will find a financial planner encouraging you to spend, but this blog post is about just that. Life is too short to only save and invest. After you take care of your taxes, savings/investments, and necessary expenses, you need to spend money so you will enjoy both today and tomorrow.
Now, advocating for spending money does not mean you should close this blog post and start shopping for international flights or go on Amazon and buy all of the items in your cart. This blog post is about intentional spending. Intentional spending changes how we look at our spending habits. Instead of thinking about money in terms of what it can buy, intentional spending focuses on how purchases make us feel.
Have you ever bought something that a few weeks later you never used again? Have you ever bought something and regretted it or felt guilty about it later? If you answer yes to either of these questions, intentional spending can limit those types of purchases.
Intentional Spending Exchanges Money for Value
What is valuable to you? Is it spending time with friends and family? Is it traveling? Is it saving up to buy a home? Is it a combination of all three or none of them at all?
Each of us has a unique set of values. Not moral values, but a hierarchy of items, experiences, and services we internally assign a subjective value to. We are not aware of these values in everyday life. You probably could not quantify the value of buying a perfectly ripe avocado at the grocery store in terms of dollars. Yet you intuitively know buying a ripe avocado adds more value to your life today than an unripened avocado.
You have likely had that feeling of driving home from shopping or an event and muttering to yourself, “That wasn’t worth it.” At that moment, you can’t identify the exact value of what it was worth to you, but you know it was worth less than what you put into it. Intentional spending is not about accurately pricing everything in our lives. Intentional spending is about prioritizing the valuable things in your life and then exchanging your money for that value.
Intentional Spending Permits You to Say “No”
Have you been in a situation where you bought something that you knew would not be worth it beforehand? Inevitably, afterward, you likely felt regret, guilt, and annoyance that you spent your money so frivolously.
Intentional spending encourages you to say no, limiting these types of purchases. When a young lawyer understands what spending brings their life value, it is easy to say no to things that do not bring you much value.
Without spending intentionally, you may feel something is not worth the price but you do not have a purpose or reason to say no. You are more susceptible to spending your money in ways that do not bring your life value.
Before intentionally spending, you may have felt uncomfortable telling someone no or telling yourself no before buying something. After intentional spending, you actively permit yourself to say yes or no, depending on the value of what you may be spending.
Focus on the Value, Not the Amount
What is more valuable to you: Ordering take-out most nights of the week or ordering out one night a week and taking a big vacation each year?
There is no correct answer to this question. Some people would quickly choose the take-out option because they are busy and know that cooking takes up too much of their valuable free time. Other people love to travel, and it is easy for them to avoid going out, so when they travel, they maximize the experience. Still, others find both valuable and will spend less on other things, so they do not have to sacrifice either of these options.
Intentional spending focuses on the value the spending brings you, not how much you spend. If spending $1,000 more on a plane ticket to fly to an exotic location is twenty times more valuable than spending $100 on an upgraded hotel room, it would make sense to spend on the better flight, right?
If we had unlimited money, intentional spending would be easy. We would spend on anything and everything that brings us value. Unfortunately for most lawyers, your spending is constrained. While you cannot ignore the total spending amount, you should not focus on how much you spend. Instead, you should focus on whether your spending is maximizing your happiness given the money you have.
Why Is Intentional Spending Important?
Now that you know what intentional spending is, why is it important? Does this way of spending make a difference?
Less Guilt and Regret When Spending
Lawyers work hard for the money they earn. When you spend this money in ways that do not bring you much value, you may feel guilty or regretful. Intentional spending won’t remove these feelings from your financial life, but those feelings will arise less often.
You are less likely to regret taking a vacation if you like to travel than if you don’t enjoy traveling. When you spend money on items, services, or experiences that bring your life value, the chances of feeling regret and guilt will be less likely than when your spending goes to low-value things.
Put Money to Its Best Use
In personal finance, I am always working with clients to save, invest, and spend money in the best way possible. Intentional spending is how we put our money to the best possible use. Money is not the goal of a person’s financial life. Money is a tool to provide us with financial security and fund our dreams and ambitions. The best use of a shovel is digging. The best use of our money is making our lives better.
When we spend without intention, we are not putting our money to its best use. Unintentional spending that does not meaningfully improve our lives can feel like a waste of our time and money. No one wants that.
When lawyers spend intentionally, their money adds value to their lives. Isn’t that what we all want?
Intentional Spending Intentionally Creates Your Dream Life
Imagine your dream life. How does it look?
Is it a life of relaxation and luxury? Is it a life with a home and lots of friends and family? Does it involve working on something that gives your life purpose without worrying whether it makes enough money?
Every dream life requires some amount of money. Some dream lives require a modest amount of spending, and others require a high amount of spending. Whatever your dream life looks like, if you don’t intentionally spend it with that dream in mind, you will never live your dream life.
If your dream life consists of sailing the world, spending a lot of your money on dining out is not intentionally building your dream life. Your spending could be creating a much better life if you instead spend your money on sailing lessons and buying high-quality gear. Spending intentionally doesn’t mean you should remove dining out completely. It just means that you are intentional with when you choose to eat out so more spending can go towards creating your dream life.
How to Intentionally Spend
You’ve learned what intentional spending is and why it is worth implementing, but now you can learn how to spend intentionally. Intentional spending is not a switch you can flip in your mind. Intentional spending is a muscle you repeatedly work on to become a better intentional spender.
So what are the exercises you need to do to become an intentional spender?
Create A List of High Priority Spending
What are your life goals? If you’ve never sat down to think about your financial goals, I recommend you go through my goal-setting exercise. This Google Doc gives you a space to contemplate your goals, write them down, analyze them, and prioritize them.
After listing your goals, you may start to see patterns or repetitions in the exercise. Did you mention spending time with friends and family a lot? Was travel mentioned? Did you identify buying a home as a goal?
Your goals may not include any of the above items. Your goals are your goals. Build a list that resonates with you and is valuable to you so YOU can spend it intentionally.
If you want extra credit, look closer at your priorities. Is there a group of goals more valuable than those directly below them? Sometimes a list of highest to lowest priorities doesn’t capture that your top 3 goals are much more important than goal #4. You can create tiers from your goals too. When you implement a tier system on what spending is valuable, you can be even more intentional.
Start Spending!
The best way to practice intentional spending is to spend intentionally. Go out and spend your money. You have already taken care of your taxes, savings/investing, and necessary expenses. This spending should be guilt-free.
When you do start spending, take a moment after spending money to ask yourself a few questions:
Did this bring my life as much joy/value as I expected?
Was that spending aligned with what I value?
Did it make my life better?
Will I spend my money on this again in the future? If so, will I spend money on it more frequently, less frequently, or roughly the same amount?
You will begin noticing that when you think about your spending and how it affected you, you will be thinking about these questions before making future purchases.
Over time your intentional spending muscle becomes stronger and stronger. You will begin to notice that your money is going towards things that improve your life. You may also find out that you are spending less.
It’s hard to think that by focusing on spending you would spend less, but it happens. If buying a home is valuable to you, you may spend less money on going out. At the end of the month, you have excess spending money than can be saved for a down payment.
Intentional spending empowers you to take control of your spending. Not every purchase will maximize your happiness, but it’s more likely than if you don’t spend intentionally. By becoming an intentional spender, you begin intentionally building your dream life.
Final Takeaways
Anyone can become an intentional spender if they want to. The keys are to:
Be clear on your goals and what spending is valuable to you
Prioritize your goals then evaluate which items, services, and experiences help accomplish them
Learn to say “no” to things that don’t align with your values and goals
Spend the money and reflect on how different spending feels
Repeat and refine your intentions when spending
Young lawyers build their wealth by maximizing their spending and savings, not through superior investments. I am not a financial planner that believes the financial issue holding you back is the cup of coffee you buy at Starbucks. Instead, together we decide what spending is valuable to you and, if possible, increase it to make your current life even better. A component of the Developing Financial Process is creating an intentional spending plan. Then we also incorporate a savings plan, investment management, tax planning, insurance planning, and many other components of the Process to build you a comprehensive financial plan. If you want to learn more about implementing intentional spending in your own life, you can schedule a Meet & Confer. This 30-minute free meeting is just a conversation between you and me about your finances. If I can help, great! If not, I’ll offer you some considerations you can take with you at the end.
Disclaimer: Nothing in this blog should be considered financial advice or recommendations. Your questions are unique to you and your own personal financial circumstances. You should consult with a financial professional before making a financial decision. See full blog disclaimer.