Why do we spend money?
Money is part of our daily lives that we need to be able to survive through our basic needs which are food and shelter. It is our modern day bartering system. It categorizes our needs and wants. What are our needs (essential spending) and wants(discretionary spending)?
- Food and Shelter
- Pay the rent/mortgage
- Pay utilities such as gas and/or hydro
- Pay the telephone bill
- Electronic devices such as a digital camera, Smart TV, cell phones, tablets.
- Big item furniture
- Luxury cars or boats
- Big brand clothing
The fact is that on average, we tend to spend too much on our wants and desires and non-essential items that we don’t need where the spending will involve the use credit cards and lines of credit for expensive items such as cars. I am not saying that you should not want these things. If these are your passion, it’s just a matter to obtain some of the wants while being able to manage your needs and other financial obligations.
Impulse spending is detrimental to your balance and your piece of mind; however, without controlling our thoughts to spend, we start to get into debt. They can quickly become unmanageable and get away from us.
It is very important to organize your spending based on your source of income. The source of income is the beginning of your schedule. It is important to focus is on paying off the needs first. Once the essential spending is taken care of then look at what is left. Prioritize on what you can afford to spend on. If there are things one would like to have but know that it will not be realistic to spend then leave it off at the moment and consider to a) use the remaining portion to put towards existing debt b) saving or invest the remaining portion.
Personally I admit that at times I have spent impulsively which got me into debt and I am working to pay the debt off through budgeting strategies that I have learned through family and by researching on the internet. I would love to hear from you about your spending stories and also your thoughts about spending in general. Please drop me a note below and I will get back to you right away!