When it comes to getting a handle on your finances, the biggest challenge is getting started with a plan of action.

Where many people fail is by misunderstanding the core of their spending habits, thinking that any heavy spending is bad spending. While this might be true later down the road in your financial journey, this can often lead to early burnout in developing new money habits.

Instead, your first steps in a long term financial plan should be to determine the expenses that bring the most satisfaction, while also determining the biggest spending pain points. The easiest path towards doing this is to simply pick 3 of each.

Pick 3 Spending Pleasures

Before you start shaming yourself about your poor money habits, you should take a closer look at 3 spending habits that bring you the most satisfaction. What many personal finance gurus don’t often tell you is that it’s actually okay to spend money on things you enjoy.

Here are my 3 spending pleasures:

  1. Outdoor gear (camping, hiking, running)
  2. Movies
  3. Music (Spotify subscription, guitars, great headphones)

Here are my wife’s 3 spending pleasures:

  1. Art supplies (for hand-lettering, calligraphy, etc.)
  2. Movies
  3. Books

Taking movies as an example, the feeling of walking into a dark theater, smelling the fresh popcorn, and being entertained for those two hours is something that we’ve always enjoyed. If we would’ve made the decision to cut out movie-going in our early budgeting years, we would’ve quickly burned out. While we can make those sorts of changes now that we’ve set a course for our financial future, we simply didn’t have that mindset during our time as Financial Novices.

When you’re new to financial changes, you need those small rewards as a reminder that getting a solid grip on your finances doesn’t have to be a miserable experience. Once you define those 3 expenses that bring you happiness, you could actually start building your budget around these items—cutting back on what matters less in order to fund the spending pleasures.

It’s crucial, however, that you closely examine what you may consider to be a “spending pleasure”. If you’re not careful, those expenses could actually be damaging your finances. A shopping addiction, for example, may only be providing you with short bursts of happiness. When the source of that happiness is coming from the spending itself, rather than the experience that comes from the spending, it’s likely to be a spending problem.

Pick 3 Spending Problems

Now that you’ve picked 3 expenses that you enjoy, it’s time to take a hard look at 3 spending habits that are dragging your finances in the dirt. This might look like overspending on eating out, entertainment, or worse, fancy cars and houses.

My 3 spending problems are:

  1. Dining out
  2. Candy of all sorts (but especially Sour Patch Kids)
  3. Video games

My wife’s 3 spending problems are:

  1. Dining out
  2. Candy of chocolate sorts (especially M&M’s)
  3. Impulse purchases at the checkout aisle

It’s important to define these spending problems early, as they’ll be your primary focus for the early months of your financial journey. While you may have more than 3 spending problems, it’s helpful to narrow this down to a 3-item list at first. It’s from these items that you should begin to steadily spend less over time, in order that you can start to shift that money towards the 3 expenses that provide you with the most fulfillment.

What’s most interesting about the spending problem list is that you likely won’t miss these items once you’ve removed them from your spending habits. Impulsive purchases are never worthwhile, and for me, video games typically get purchased only to sit in my game library unplayed.

The core idea behind these “pick 3” lists is to provide razor focus when making long term changes to your money habits. It’s never easy developing a budget, becoming a saver, or making sense of investing. But by starting small and identifying these two small lists of expenses, you’ll learn enough about yourself to make changes that truly last.

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