What Are You Spending Your Money On?
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What Are You Spending Your Money On?
Every day, we make many choices that affect our finances. These decisions may not seem like a big deal because they aren’t that expensive in and of themselves. But over time, they can add up financially and create habits that are very hard to break.
And it’s not just the cost of those decisions, it is the potential health impact over time. In addition, not every one of those decisions is small or inexpensive, such as smoking cigarettes or drinking too much.
Things To Know
- Spending habits can have financial and health consequences.
- One way to understand your spending patterns is to track them.
- Spending money on small things can add up over time.
Habits Can Get Expensive
Consider the following examples and how they can impact your finances:
- Every work day, you brew coffee at home instead of stopping at a coffee shop for a regular coffee, or perhaps a mocha or latte. Coffee brewed at home usually costs less than $.25 a cup, while a mocha or latte can run up to $4. In a month’s time, you could save between $75 and $95. Over a year, that could add up to $1,000 or more. If you put the savings in a savings account to meet a life financial goal, such as saving for a new car or retirement, that $1,000 a year could make a big difference. Even if you cut back to treating yourself to a premium coffee once a week or a few times a month instead of every day, you’ll save a significant amount of money.
- Instead of taking the time to shop for and make lunches at home to take to work, you eat out most days. Because you don’t have much time for lunch, many times you use a fast food drive-through. The cost of even an inexpensive lunch can easily get close to $10 a day. Even two fast food lunches a week can cost $80 a month or nearly $1,000 a year.
Habits Create Consequences over the Long Term
As noted in the previous examples, habits may have consequences over the long term, not just in terms of how much they cost you, but also in other ways. Consider the fast food example.
Over five years, eating fast food two times a week could cost you $5,000. What else could you do with that money that would be more productive? That money could pay a semester’s tuition at a community college for your child, for example.
In addition, there are health consequences associated with eating fast food. The fat and salt content alone could create health problems that may make it difficult to function in life and on the job and may mean more out-of-pocket healthcare expenses.
Track Spending Habits
If you’re not aware of what you are spending money on, you can’t change those habits. Below is a sample worksheet that will help you track unnecessary spending and comprehend the overall impact it has on your finances. This one assumes a family of four:
