Mindful Spending with Autopilot

Mindful spending is all about being intentional with our spending decisions and an Autopilot system helps to reinforce this positive money habit.

Budget - A tiny word that’s worth 10 points in Scrabble. An estimate of income and expenditure for a set period of time, says the Oxford Dictionary. For many it triggers alarm bells of restriction doom and gloom and lots of spreadsheets. I prefer to think of it as a mindful spending plan, where I’m simply mapping out my spending choices upfront. This covers both our necessities, as well as intentionally allocating money towards things that really make us happy. That is right, we plan to mindfully spend on the fun stuff!

Your money autopilot helps to keep you on track, but your mindful spending plan is how you decide what being on track looks like. Whether it is detailed or minimalist is neither here nor there. The point is it has to work for you.  Whatever yours looks like, here are some important things to consider:

Know your income - salary from your job, any government payments and/or money from side hustles,
Work out your needs – the essential things you need to spend to live
Work out your wants – the things you don’t need but make life enjoyable
Ensure you make some room to save – pay your future self first!

A thought on needs and wants – how do you tell them apart?  Here’s a good example – I need shoes to go to work.  Shoes are a Need, but that pair of $300 heels that I’m lusting after, is more of a Want.

Let’s look at how to come up with your mindful spending plan.

Step 1 - Choose how often you want to get paid

Start your mindful spending plan by matching the frequency of your system to your pay cycle. This helps if you are used to budgeting within your pay cycle. However, you can choose any frequency that works best for you. Many prefer to work in shorter cycles to avoid overspending.

Autopilot puts you in the driver’s seat of your finances as you can control when you distribute money from your savings accounts to your 'needs' and 'wants' accounts.

Step 2 – Choose what to be mindful about

The basic mindful spending plan considers three categories of save, needs and wants. It’s a great starting point if you want to keep things simple. you can choose to add subcategories if there are areas that require focus.

A common addition to an autopilot system is to create categories for fixed and variable spending.

Some expenses are fixed, like a mobile plan that charges you exactly $50 each month, while others, like your grocery bill, change week to week.
It may help to group your fixed expenses together and set aside money specifically for them. For example, you could bundle your rent, car registration and insurance together and create a separate allowance/account for those fixed needs. Then, set up direct debits in your Autopilot system and these will be paid automatically, with no ongoing effort required.
Separating variable from fixed expenses will further reduce the mental load of sticking to a budget. You won’t have to keep track of the money you’ve set aside for bigger items. So, before doing your groceries, just check your “day to day needs” account (a variation of the 'needs’ account for variable needs) and you'll know exactly how much you can spend at the supermarket without worrying about holding money aside for your rent and car registration.
Check out how Sarah did it.

Consider what aspect of your money you have trouble managing or want to work on. For example, you might be worried about some large bills later in the year or you want to cut out some unnecessary online shopping. You could add a needs category specifically to set aside money for those large bills and a wants category for online shopping so you can track that easily.

Step 3 – Decide how much to allocate to each category

Now you need to figure out how much to allocate in your spending plan for each category each period. There are two different ways to do this. Pick the one that works for your circumstances and personality.

There's a lot to be gained from understanding your current spending to create a detailed spending plan. But it’s not for everyone; the fastest way to get started involves minimal number crunching.
Create your mindful spending plan by allocating a percentage of your salary to each category. For example, 10% to savings, 60% to needs, and 30% to wants. Bring out your calculator and allocate the appropriate dollar amount to each category.
If you have some idea of what your current spending allocations are currently then go with that rather than the example percentages. As the allocations are unlikely to be accurate to begin with, take special note of Step 4 so you have some buffers in place to deal with it. Over time, you can adjust your allocations as you learn more about your spending.

The best place to start your mindful spending plan is to base it off your current spending patterns. A good place to start is by downloading your bank statements online. Ideally 12 months of data will provide the most accurate view, however a lot can be learnt from a few months of transactions. Just be mindful of any large one-off expenses that may be missing.
Categorise transactions as either 'needs' or 'wants' (or other categories you have added), then match the amounts with your Autopilot frequency. If it’s weekly, work out what each of your expenses looks like on a weekly basis. For example, that annual car registration of $800 works out to be $15.38 per week. It's then a matter of totalling your needs and wants on a weekly basis to figure out how much you should set the weekly transfers from your savings accounts into the ‘needs’ and ‘wants’ account.
While it can initially be confronting, understanding your current spending provides the foundation for change. Looking at all your spending in one place, you may be surprised at what certain things cost you, or even realise that you're paying for things like subscriptions that you no longer use. Use this information to improve mindful spending plan going forward.

Step 4 – Set your spending plan up for success

No spending plan is perfect. Life happens, and unexpected costs arise. Build flexibility into your autopilot spending plan so that one small issue doesn’t stop the system from working. Here are some suggestions:

Taking control of your money doesn't have to be a time-consuming task. Just by starting with the Autopilot system, you will quickly learn a lot about your spending habits as you review the balances of your 'needs' and 'wants' accounts,. Don’t stress about building the perfect system, it's the ongoing use and optimisation of your Autopilot that builds active saving and mindful spending habits.

Avoid setting overly ambitious savings targets. Like extreme diets, being too restrictive with spending can lead to burnout and giving up. Instead aim for sustainable active saving amount that you can build on over time.
If you have been spending more than you earn, or your circumstances mean you find saving difficult, start with something small like $10 per week (or even less). The important thing is to begin the habit and stick with it.
Even when we try to include all our needs it’s easy for things to be missed or for things to be more expensive than expected. Plan for this by allocating a little extra to your 'needs' . If you're spending plan has $200 a week for groceries, allocate $220 (10% more) to avoid dipping into your savings. When you stick to the allocation you can transfer the surplus to your savings.
Begin each spending account (needs and wants) with a safety net amount, such as $100. This acts as – the new ‘zero’ for the account that you aim to keep its balance above. You achieve the benefit of a spending goal without the hassle of a blocked payment or embarrassment at the checkout for a minor overspend. Choosing the same safety net amount for all spending accounts keeps it easy to remember.
Set a monthly review of your Autopilot system to note what worked smoothly and where adjustments are needed. Implement changes like adjusting allocations or setting up new accounts as required.

Looking to power up your money?

Find more Bank First content on Financial Wellbeing to help you make the money stuff easy.

Mindful Spending with Autopilot

Mindful spending is all about being intentional with our spending decisions and an Autopilot system helps to reinforce this positive money habit.

Know your income - salary from your job, any government payments and/or money from side hustles,
Work out your needs – the essential things you need to spend to live
Work out your wants – the things you don’t need but make life enjoyable
Ensure you make some room to save – pay your future self first!

Let’s look at how to come up with your mindful spending plan.

Step 1 - Choose how often you want to get paid

Autopilot puts you in the driver’s seat of your finances as you can control when you distribute money from your savings accounts to your 'needs' and 'wants' accounts.

Step 2 – Choose what to be mindful about

A common addition to an autopilot system is to create categories for fixed and variable spending.

Some expenses are fixed, like a mobile plan that charges you exactly $50 each month, while others, like your grocery bill, change week to week.
It may help to group your fixed expenses together and set aside money specifically for them. For example, you could bundle your rent, car registration and insurance together and create a separate allowance/account for those fixed needs. Then, set up direct debits in your Autopilot system and these will be paid automatically, with no ongoing effort required.
Separating variable from fixed expenses will further reduce the mental load of sticking to a budget. You won’t have to keep track of the money you’ve set aside for bigger items. So, before doing your groceries, just check your “day to day needs” account (a variation of the 'needs’ account for variable needs) and you'll know exactly how much you can spend at the supermarket without worrying about holding money aside for your rent and car registration.
Check out how Sarah did it.

Step 3 – Decide how much to allocate to each category

There's a lot to be gained from understanding your current spending to create a detailed spending plan. But it’s not for everyone; the fastest way to get started involves minimal number crunching.
Create your mindful spending plan by allocating a percentage of your salary to each category. For example, 10% to savings, 60% to needs, and 30% to wants. Bring out your calculator and allocate the appropriate dollar amount to each category.
If you have some idea of what your current spending allocations are currently then go with that rather than the example percentages. As the allocations are unlikely to be accurate to begin with, take special note of Step 4 so you have some buffers in place to deal with it. Over time, you can adjust your allocations as you learn more about your spending.

The best place to start your mindful spending plan is to base it off your current spending patterns. A good place to start is by downloading your bank statements online. Ideally 12 months of data will provide the most accurate view, however a lot can be learnt from a few months of transactions. Just be mindful of any large one-off expenses that may be missing.
Categorise transactions as either 'needs' or 'wants' (or other categories you have added), then match the amounts with your Autopilot frequency. If it’s weekly, work out what each of your expenses looks like on a weekly basis. For example, that annual car registration of $800 works out to be $15.38 per week. It's then a matter of totalling your needs and wants on a weekly basis to figure out how much you should set the weekly transfers from your savings accounts into the ‘needs’ and ‘wants’ account.
While it can initially be confronting, understanding your current spending provides the foundation for change. Looking at all your spending in one place, you may be surprised at what certain things cost you, or even realise that you're paying for things like subscriptions that you no longer use. Use this information to improve mindful spending plan going forward.

Step 4 – Set your spending plan up for success

Avoid setting overly ambitious savings targets. Like extreme diets, being too restrictive with spending can lead to burnout and giving up. Instead aim for sustainable active saving amount that you can build on over time.
If you have been spending more than you earn, or your circumstances mean you find saving difficult, start with something small like $10 per week (or even less). The important thing is to begin the habit and stick with it.
Even when we try to include all our needs it’s easy for things to be missed or for things to be more expensive than expected. Plan for this by allocating a little extra to your 'needs' . If you're spending plan has $200 a week for groceries, allocate $220 (10% more) to avoid dipping into your savings. When you stick to the allocation you can transfer the surplus to your savings.
Begin each spending account (needs and wants) with a safety net amount, such as $100. This acts as – the new ‘zero’ for the account that you aim to keep its balance above. You achieve the benefit of a spending goal without the hassle of a blocked payment or embarrassment at the checkout for a minor overspend. Choosing the same safety net amount for all spending accounts keeps it easy to remember.
Set a monthly review of your Autopilot system to note what worked smoothly and where adjustments are needed. Implement changes like adjusting allocations or setting up new accounts as required.

Looking to power up your money?

Find more Bank First content on Financial Wellbeing to help you make the money stuff easy.

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Mindful Spending with Autopilot

Mindful spending is all about being intentional with our spending decisions and an Autopilot system helps to reinforce this positive money habit.

Step 1 - Choose how often you want to get paid

Step 2 – Choose what to be mindful about

Step 3 – Decide how much to allocate to each category

Step 4 – Set your spending plan up for success

Looking to power up your money?

‌

Mindful Spending with Autopilot

Mindful spending is all about being intentional with our spending decisions and an Autopilot system helps to reinforce this positive money habit.

Step 1 - Choose how often you want to get paid

Step 2 – Choose what to be mindful about

Step 3 – Decide how much to allocate to each category

Step 4 – Set your spending plan up for success

Looking to power up your money?

Learn how to develop your mindful spending plan

Learn about fixed and variable expenses

Mindful Spending with Autopilot

Mindful spending is all about being intentional with our spending decisions and an Autopilot system helps to reinforce this positive money habit.

Step 1 - Choose how often you want to get paid

Step 2 – Choose what to be mindful about

Step 3 – Decide how much to allocate to each category

Step 4 – Set your spending plan up for success

Related articles

Looking to power up your money?

‌

Mindful Spending with Autopilot

Mindful spending is all about being intentional with our spending decisions and an Autopilot system helps to reinforce this positive money habit.

Step 1 - Choose how often you want to get paid

Step 2 – Choose what to be mindful about

Step 3 – Decide how much to allocate to each category

Step 4 – Set your spending plan up for success

Related articles

Looking to power up your money?

Learn how to develop your mindful spending plan

Learn about fixed and variable expenses