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.

Spending Wisely

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!



6 thoughts on “Spending”

    1. Hi Maurice,

      This is all psychology that the corporates are using on consumers to spend. Of course they need consumers to buy their products or else they will not survive and will defeat the purpose of economics. What the consumer needs to understand is knowing their limits as their income is finite and not to overspend beyond their source of income. Budgeting has to be a part of an individual’s life and should even be taught in schools to make it important of what is the difference between the needs and wants. Budgeting should be something that everyone can do as a discipline just like any other life skill. If this becomes the norm, I believe that it will reduce the issues of impulsive spending and living within the household income.

  1. Your points are well taken and I think we have more people spending on the ‘wants’ and not the needs. We are influenced every day by all the advertising and credit card companies making it so easy to get the extras. Being in debt beyond your income is very stressful but also so easy to fall into this trap. Sometimes life and living get in the way of being practical. Sad but true.

    1. Thank you Merry for your comments. I understand that advertisers post sales to entice the average person to buy their products whether it is a 4K UHD 80″ TV or a 0% APR luxury SUV. The average person has to ask themselves if it is worth spending the extra money or if it can wait or be realistic and spend on what they can afford. The product will always be there and given time, the price will depreciate. I can tell you that I have have fallen into the trap of the electronic gadgets that are so attractive and I say to myself I can spend it, put it into my credit card and pay slowly. There comes a point where there has to be a limit and to control the spending habits before it takes you to a point of no return. I see enticing products but I control my desires and say that it looks interesting but I don’t really need it. This is a firm mindset to say that even with all the promotions, sales, clearances and all the specials that it does not register in my mind and that I control my spending; not the other way around. Do not let the advertisers get into ones mind to the point of hypnosis to get at their pocket books. Resist the urge and say to yourself that you are in control of your spending. If you need it, get it, otherwise, save your money.

  2. A very informative and well organised article you have. Some people tend to spend more of what they don’t have. As for me, ill focus on investing and spend what i can afford.Points taken.Thank you.

    1. Thank you for your comment to my article. You are very welcome Lucia with regards to the points as I have been through this and it can be very tempting looking at the items that gain ones attraction. Before spending, look at what you have first and prioritize it to the needs, debt, savings. The wants should be a last resort. If there is extra cash flow then, sure, spend on the item but make sure to keep it within your budget.

Leave a Reply

Your email address will not be published. Required fields are marked *