By ARTHUR VIDRO
On Consumerism
Thanks to technological advancements, it has never been easier to spend money without realizing it.
Every company wants you on an automated subscription, and there’s a reason why. It continues to draw money out of you without your thinking about it. All those autopays make it easy for people to lose track.
Spending cannot be controlled unless one is cognizant of what one is buying. How can one become better at noticing their purchases? Paying with cash or writing out a check on paper better positions a consumer to notice the money flowing out.
To stay on top of their purchasing behavior, some folks try budgeting.
Budgeting software helps you to categorize and track your spending. (Some of us still do this, getting the same result, using paper and pen.)
Folks who use budgeting software to show where the money is going need sufficient discipline to record each expenditure. Many folks lack such discipline or can’t be bothered with putting in the effort.
Other folks turn to professional financial planners.
A certified financial planner is willing to comb through transaction records to better understand a client’s monthly spending.
A client often asks, “Where is my money going?” The answers sometimes astound them.
Some people don’t realize how much they are spending on Amazon impulse buys.
Far too many online purchases are spur of the moment. One woman who sought the help of a financial advisor had no idea she was shelling out $500 a month for in-application purchases in online games. Those purchases weren’t pondered.
Then there’s coffee bought one cup at a time.
Some folks purchase a cup of coffee on their way to work every weekday morning. It’s a habit. Which is fine, if one can afford it.
The smallest, most basic cup of coffee at Starbucks each workday adds up to more than $550 a year ($600 with sales tax). However, most people don’t buy the smallest, most basic cup. They go for a medium, large, or extra large and they want something much fancier. The costs quickly escalate.
The annual cost for a large caffe mocha at Starbucks each workday comes to about $1,200 (about $1,300 with sales tax).
Get another cup at each workday lunch, and you double the annual cost.
That’s without anything to eat.
Again, if one can afford it, great. However, what about people who are frequently under financial stress and keep up the Starbucks habit?
Even if one likes the flavor of Starbucks coffee (I don’t), one can brew it at home and reap a huge savings. Likewise for Dunkin’ and the other coffee places.
Even financial planners are guilty of mindless overspending. A certified financial planner in Illinois and his wife felt they were overspending, but they weren’t sure for what. So they used a budget application to track their spending throughout 2023.
They discovered they were spending thousands of dollars a month going out to dinner. For that couple, whenever they felt the desire, they dined out. Without thinking about it. Without even having a dining-out budget.
Many of us set budgets based on how much we would like to spend, with little regard for how much we actually spend. Some folks spend nearly twice as much as they believe they’re spending. They just never bother to add it all up.
Knowing how much you actually spend is very eye-opening.
Overall, we’re not good judges of how much we spend. One’s estimated budget might not even be in the right ballpark.
We tend to forget that the 12 months of the year do not have equal costs. Taking all three pets to the vet for their annual physical? That will make that month more expensive. Like to play golf a lot? Then the warm-weather months will be more expensive. Always take a vacation in a certain month? That month will be far more expensive than your average month. Use a lot of heating oil in the winter? Expect to pay more for those months.
When one has quarterly or semi-annual or annual expenses — for instance, auto insurance, property insurance, life insurance, membership dues — then the months those bills are paid will be more expensive.
This is why some of us recommend looking at a full year’s worth of expenses.
Too many people have no idea how much they’re spending or where it all goes.
All they know is that after all the shopping is done and all the bills have been paid, the money left over is far less than they expected.
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