In order to do this well I typically suggest people track every penny of their spending for a month. Only when you have detailed list of spending can you realize where you are bleeding cash, for example I know several people who buy a lunch every day. I just can’t imagine wasting that kind of money. After all my leftovers often smell and look better than what they are eating.
Yet in the end spending is about personal choices and determining what makes you really happy. The problem I find with most people around doing this is they often settle on a mediocre happiness rather than insisting that each dollar brings you the maximum happiness possible at that time. People watch hours of TV thinking it brings happiness. No, it brings a brief escape at best. So often cable is a waste of money. This is not to say in some cases it does bring happiness to some people, just not that many.
Another example is leaving lights on or having a dripping faucet. Both don’t bring any happiness and are just wasting money. Money is suppose to cover the essentials in your life: food, water, shelter and then from there provide for some select luxuries to increase your happiness. The issue with most people is we live such lives of excess we can’t strip things back to the basics and determine which luxuries actually make us happy. I would suggest that most people could benefit from a month of living poor by choice to determine what they really would miss. Cut your spending in half and see what happens, you might surprise yourself.
So here are some luxury items that bring me lots of happiness:
- High speed internet
- Good coffee beans
- 400+ thread count sheets and a firm pillow
- Widescreen LCD TV with surround sound – for movies
- Buying select books
The point of the above list is it works for me. It may not work for anyone else in the entire world. That doesn’t matter, what matters is finding your own list. Don’t assume anything is required until you know it is and best of luck with your own spending analysis.