Good vs. Bad Spending

good vs bad infographic

Use psychology to build a budget you’ll stick with!

When you start looking for financial advice, experts will share their take on what’s “good” and what’s “bad,” but they will often contradict each other.

It’s time to rethink

Rather than trying to follow all of the expert advice, start by losing the desire to classify everything as “good” and “bad.” Instead, just remember these three steps.

Step 1: Prioritize

Prioritizing your goals means taking a little personal reflection time and writing a few things down.


  • What do you want your life to look like over the next few years?
  • It could be your dream to train for a new career, have an adventure in a foreign country, start your own business or raise a family 


  • Prioritizing your goals should not be confused with categorizing your expenses
  • You shouldn’t prioritize what you think you “should” be saving up for—do not let other people’s priorities define your goals

Allow your goals to be a judgment-free zone—goals and dreams are as diverse as the minds and personalities behind them. In most cases, goals reach beyond the familiar trifecta of “pay off student loans, buy a house, save for retirement.”

Why prioritizing works

  • Prioritizing your goals gets you buzzing about what your money can do for you. There are a couple of motivating factors at work here. 
  • You are asserting your beliefs and your values. You are reminding yourself of why you’re willing to adopt a budgeting system in the first place. Studies show that you’re more invested in activities that reflect your personal values­—this is what generates stamina and determination.
  • It reminds you that you’re in charge—that you have a say in where your money goes. Social scientists point to autonomy as being a critical element to sustain motivation. It’s powerful to realize that your budget is a collection of choices you make in order to create the life you want.

Get started

  • Grab a pencil and paper
  • Ask yourself what you want
  • Think about it for 10 minutes
  • Write the answers down
  • Realize your goals are achievable 

Step 2: Track

Tracking your expenses means being aware of where your money is going as you spend it.

It’s totally up to you:

  • Paper: Some swear by tracking their expenses with good ol’ pencil and paper
  • Apps: Others like to use budgeting apps on their smartphone or spreadsheets on their computer
  • Envelopes: Some gravitate to unique approaches like portioning their spending money into envelopes

When you track your expenses, a couple of things will come to light. 

  • You start to realize that every transaction, no matter how big or how small, is either contributing to a goal or taking away from it
  • The second thing you’ll notice is that the longer you’ve been tracking your expenses, the more you’ll see evidence of your progress

Why tracking works

  • Another critical element in sustaining motivation is competence, or your ability to do something well—we thrive on being reminded that we’re improving
  • Tracking your expenses helps you to identify your spending patterns and to course-correct when necessary 
  • By tracking your spending, you’re also tracking your effort—you’re creating a record of your progress along with a record of your transactions 
  • Before long, you’ll have tangible evidence of how your actions and your follow-through are contributing to a calmer, happier financial life 
  • You’ll see how capable you are of budgeting and you’ll find it easier to keep your budgeting winning streak going

Get started

  • Try out a new budgeting system today
  • Browse the App Store or the web, or pick up a book
  • Don’t spend much time comparing budgeting approaches
  • Just pick one and try it out

Step 3: Reward

Rewarding yourself means encouraging and celebrating your progress as you create healthier financial habits.


  • Time-based: Use budgeting app every day for 30 days
  • Achievement-based: Pay off all credit card debt
  • Increment-based: Emergency fund reaches $500, $1,000, $2,000


  • Material rewards: Fancy coffee, movie night, new gadget
  • Time- and experience-based rewards: Give yourself permission to spend an entire day just vegging out

Why rewarding works

  • Quite simply, rewards feel good—rewards highlight our achievements and renew our commitment
  • As kids, we loved earning those gold star stickers—although that familiar achievement/reward structure practically disappears in later years, it doesn’t mean that rewards are any less effective in adulthood
  • Assigning rewards to a milestone creates added incentive and boosts your motivation—when you earn, claim and enjoy a reward, your brain gets an extra hit of dopamine, which increases your focus and drive

Get started

  • Brainstorm a list of budgeting milestones and a list of possible rewards
  • Set a timer for 10 minutes to keep yourself on track
  • After the time is up, assign the rewards to your milestones 
  • Rewards should celebrate your efforts and be exciting to work toward
  • When you reach your milestones, claim your rewards!

Incorporating Prioritize, Track, Reward into your budgeting method of choice will boost your motivation while tackling your personal finance goals at the same time.


Sources:, and