Knowing What You Spend Is MANDATORY

There’s all sorts of reasons people bury their heads in the sand when it comes to personal finance.  It’s too complicated, it’s depressing, it’s taboo, it’s not fun or interesting…

Sure, if you want to talk about how the Economy is doing, or about how only professionals know what they’re doing in the stock market, and your parents said you need to buy a house in order to build wealth or you’ll be living on the street, then yeah, I don’t really care to talk about that stuff either.

I’m not saying those aren’t issues worth talking about.  We’re just not that far in the game yet.  I hear people talk about these things all the time in relation to their financial situation (edit:  rhyme definitely intended!).  The problem is, we skipped something.

Most of us don’t know how much we spend.  (Around 2/3rds of Americans)

And not knowing what you spend is not an option.  Because it’s the one money thing EVERYBODY can do.

Knowing what you spend = knowing what you spend money on, which forces you to think about the reason why you’re spending that money and how that makes you feel.

No, simply knowing how much you make (and spending all or more of it) doesn’t count.

Knowing that housing is expensive where you live, that you have to spend a lot on food because you have a family, and that you can’t save because you have to make student loan payments every month don’t work either.

There’s nothing to back that up.  It’s vague and doesn’t tell the whole story.  The whole story is how much money you spend in one area vs. another.  If you’re not honest with yourself, if you’re not looking at the whole picture, if you’re not willing to see how much your life costs, you’re screwing yourself.

You Have No Excuse For Not Knowing How Much Money You Spend!

Well, I’ll allow one – if you didn’t know before.  I don’t remember ever being formally told to track my spending.  I didn’t start until my mid 20’s and that was only because I wanted to start using a budget.  But if you’re a human reading this article, now you know.  So no excuses.

Not being good at math is not an excuse.  Not having time is not an excuse (it takes 5 seconds to write down a transaction, save a receipt, or log it in an app).  Not making enough money is definitely not an excuse, as well as being in debt, not having a job, thinking about bankruptcy, or any other situation you find yourself in financially.

I will say that the less financially secure you are (and having a job does not automatically mean you’re financially secure!), the more accurate you need to be.  

Note:  I love following people who have reached FIRE, and plenty of them don’t track their expenses to the penny.  But they have at some point, and they know how much their lifestyle costs each year – their livelihood depends on it.  

Back To Screwing Yourself

Maybe past-you screwed present-you.  He racked up some student loans, didn’t take care of his health, made some mistakes.  No excuses.

If you don’t know how much your lifestyle costs, you’re probably screwing yourself over on every good thing that will financially happen to you.

If you know the value of a dollar, you know that a dollar is what you trade some of your life for.  Sometimes we get lucky and only have to trade a little bit for a lot of dollars.  We make that trade in order to cover our needs and use what’s left to find happiness.  

We each have a limited amount of life to trade and a limited number of dollars.  Spending on one thing takes away the ability to spend on something else.  This applies to both time and money.

Spending without knowing the cost usually results in waste – in this equation, that comes out to more time, energy, and effort for less happiness than you think.

At this point, you can be honest with yourself about what your real problems are, how and why they happened, and what you can do about them.

This doesn’t mean your problem is the economy, expensive housing, food spending, or student loans.  It’s how much you, being honest with yourself and aware of what the costs are, spend on your needs and wants.

And there are some problems that you might not be able to do anything about.  We’re all different and have different resources.  

But knowing what we spend is something every one of us can do.  

Image by Sira Anamwong at

4 thoughts on “Knowing What You Spend Is MANDATORY

  1. It’s funny because Mr. Picky Pincher and I used to think it didn’t matter if we knew what we spent. Yikes! Once we realized we couldn’t afford to buy a home, we started tracking our spending and were shocked. We spent over $1,000 a month on food for two people. Ouch! The moral of the story is to always track each expense, y’all.

    1. I agree! While I was generally pretty good about saving and paying off debt in my early 20’s, I wonder how much more I would have done if I knew where my money was going. Habits and routines and impulses are a lot stronger than we give them credit for!

  2. I like that you pointed out that many people who have reached FIRE don’t necessarily track their expenses now but they did at one point. I wish more people knew this!

    1. Thanks Lisa! I felt like it was important because knowing that you spend $xx,xxx a year, and it’s been that way for years since it took an amazing amount of discipline to save at a high rate, is very different from living paycheck to paycheck and simply knowing “it all ends up getting spent”.

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