A common question to our clients is: do you really understand where you’re spending your money? At first, most people aren’t quite sure. They miss and underestimate certain categories. Eventually, they reveal this black hole of dollars they can’t explain. By the second (or tenth) go-around, we begin to get a fully formed budgeting picture.
That’s when something interesting starts to happen. As we get to the real budget, their “category” is unearthed. We all have that one place where we spend money which we know is excessive (almost to the point of embarrassment). I can’t recall how many times I’ve heard, “I know, Andrew. We spend a lot…too much on (fill in the blank).”
My response is always that it’s OK. Everyone has one. Honestly, it’s good to have places and/or things on which you indulge. These are passions or reasons that motivate you to work hard. It makes no sense to not enjoy the fruits of your labor.
Is your spending category an issue?
The question then becomes, is your category an issue? The only time I get concerned is if one of these three things is occurring.
1. Is your category getting in the way of accomplishing more important dreams? For instance, are you going on so many vacations that you won’t be able to retire when you want? Or, are you spending so much on wine every month that saving for your child’s college isn’t happening?
2. Is your category being detrimental to your finances? Do you find you’re racking up credit card debt because of your category? Or, are you not able to save because that category is taking priority over your financial health?
3. Is your category getting in the way of your relationship? It’s sad to see, but sometimes I see one spouse desperately trying to save and keep the family on track. However, the other spouse is spending frivolously on their category. These uneven financial situations can create a lot of tension. All too often I see this point of tension between spouses and it is not healthy.
Be honest with yourself.
What you won’t hear me say is stop enjoying your money. Life is too short. However, what you will hear me say is take a good look in the mirror. If your spending habits are inhibiting your goals, putting you into debt, or ruining your relationship then it’s time to change.
Reprioritize your life; find a way to (dare I say) have your cake and eat it too. Maybe you vacation smarter or only occasionally drink expensive wine (I can’t believe I said that). Perhaps talk to your spouse about their priorities. Do they have a category that is going unfulfilled? You may find anxiety lies in the fact your significant other wants to enjoy things as well but can’t because of you. Ideally, you’ll find a spot where you can spend your money together on something which gives you both joy.
When I look in the mirror, I not only see a devilishly handsome man, but I also recognize I don’t fall victim to my three issues. I am on track financially, don’t go into debt for my guilty pleasures, and our family finances don’t get in the way of our relationship.
I recognize I also have a category. My wife and I like going out to eat. When I look at my monthly credit card bills, I am astonished at how much we spend on restaurants. I love trying a new place with a nice glass of wine. It almost makes me feel like a food critic, as we always rate the experience afterward. However, this category brings the two of us closer together. That restaurant outing is all we need to make us feel that joyful connection again.
Never be ashamed that you have a category. We all do–so what! Just take a step back and ask yourself, what do you see when you look in the mirror?