The Secret to Saving: Think Before You Spend There's a difference between spending irresponsibly and spending on things that improve your quality of life. Knowing the difference can set you free.

My friends are appalled when they learn I spend $200 a month for a gym membership. "I thought you were supposed to be the King of Frugal," one of them said to me the other day. Not really. I'm more like the King of Conscious Spending.

Sometimes people forget that it's OK to spend the money they earn. Sure, you should set aside an emergency fund, save for your children's college education and sock away money for retirement. But after you've done these things, what's left is yours to improve your quality of life.

"Experts make people feel guilty about wanting to spend money on lattes, but guilt isn't a productive emotion when it comes to money," says Ramit Sethi, author of I Will Teach You to Be Rich. "Being a conscious spender is about making your money match up with your values guilt-free. It's about spending extravagantly on the things you love while cutting costs mercilessly on the things you don't."

Conscious spending means actively choosing to spend on some things and not on others. Contrast this with how most people spend. (And, in truth, how even the financial experts spend a lot of their money.) People tend to spend on reflex. We buy things because we're expected to. We spend to have what other people have. We sign up for gym memberships that we never use, subscribe to magazines we never read and pay for golf clubs that get buried in the garage. We make impulse purchases at the grocery store--or even on large items, like computers and cars. In other words, we often spend without thinking.

But with conscious spending, you evaluate every purchase, making sure to ask yourself:

• "Why am I buying this? Will this help me meet my long-term goals? Will it make me happier?"
• "Would I rather have this now, or would I rather have something bigger and better next year?"
• "Are there other, cheaper options? Could I borrow this? Could I buy it used?"

The process forces you to be more aware of every purchase you make.

I'm willing to spend $200 a month for my gym membership because it has helped me lose 50 pounds in the past 18 months. I've made an active, conscious decision to spend this money, and I've made certain that I'm deriving value from it. The $3,600 is worth it to me. In exchange, though, I've given up cable TV, I buy my clothes at thrift stores and I often walk or bike instead of drive.

"There are things we love, and it's OK to spend on them," says Sethi, who also writes at IWillTeachYouToBeRich.com. "But you can't afford to have everything. So ask yourself what you don't care about when it comes to spending. Choose to spend your money on what you love instead."