You May Think That You’re Frugal…But Where Does Your Money Go?

We all like to think that we have total control of our money, don’t we? We certainly know our salary if we get a weekly paycheck and we also know about those monthly dividend checks, part time side hustles and other alternative sources of income that we receive like tax refunds, rewards from our credit cards and gifts for birthdays. You may even feel you don’t need any advice or input on your finances and you’re doing just fine. But where does your money go?

You May Think That You're Frugal, But Where Does Your Money Go?

The truth is that people, no matter how good they are at their finances and no matter how careful they think they are, do “slip up”. That slip up can be a once-a-month thing when an urge to spend might just be so strong and the want so intense that you can’t say “no” and give in to it. Or it can even be just a bad habit you’ve formed that occurs each week or even worse every day. It can be looking only short range and not thinking about the “big picture”.  These “drips” a little bit at a time are like having a leak in your plumbing that’s so small you don’t notice it. But it’s there and it’s doing damage to your finances just like that leaky pipe can do to the walls, floors, and foundation of your home. Don’t think you have a leak? Let me ask you just a few questions then.

  • Do you pay more than $15 for a haircut?
  • Do you pay to get your nails done or hair colored regularly?
  • Does each morning start with a Starbucks coffee and baked treat?
  • Do you eat lunch out of the office every day and top it off with a nice ice cream or other treat?
  • On the weekends are you a junk food junkie?
  • Do you drive when you can walk that 5 minute trip to the store or your friend’s house?
  • Does your car get at least 30 miles per gallon?
  • When did you last renegotiate your insurances policies to try and save some money?
  • Do you have a pet and does he/she get special food, vet care, and all kinds of special things like toys, grooming, and/or similar things?

These discretionary items are a big part of all of our expenses each month, and it grows even greater when you have a family of 4, 5, 6, etc.

I’m not judging these expenses as right or wrong, mind you. What I am saying is that they are places where you can control money and that if you are having any kind of everyday troubles with money, are the places you can and must look at first. It’s simply a personal choice you make and that you can change.

When there are things that you want then that means there are others you may have to cut. It’s spending based on need and wants, yes, and it’s based on priorities that you set yourself.

You are probably not vacationing on an island someplace every weekend and you’re probably not dining at the Ritz-Carlton either but what you are doing is having a similar effect on your monthly budget and lifestyle. Worse, it may be having a disastrous effect on your long-term goals like college funds and retirement savings.

There are only two ways to make sure you are able to afford all the things your family will need over its lifetime. One is to earn more money and that’s something that is very possible. It is necessary to cover the growing list of needs you will have. The other way is to cut your expenses wherever it can be done based upon priorities, a list that you determine all by yourself.

This is why so many financial planners talk about a budget. But no matter how much we talk about it, it always amazes me as to how many people aren’t tracking and planning their income and expenses. They simply are just wandering around without a clue as to how much at risk they might be.  Or imagine this. They just don’t care. Really frightening!

You may read about all the various recommendations of how and what to budget and how to know if you’re doing all the right things to insure that you can take care of all your bills and provide security for you future and retirement. There are the 50/30/20 percentage budgets.  That’s a budget that provides a plan for 50% for needs, 30% for wants (discretionary things), and 20% for savings.

There are others as well such as the line item budget. This is a typical spreadsheet budget that totals up each expense category and balances out with your planned income categories based on previous performance.

There’s the zero sum budget, that’s where you set income for use by category and when you have spent that you simply stop and makes it very difficult to spend any more. It helps control as you spend and allows you to stay on track barring exceptional expenditures that may be unplanned. If there’s any money left over in your spending accounts use that money to save, payoff your debt or fund your retirement account.

You might try the old time-tested cash budget. Simply break out your expenses by cash (in envelopes or however you choose) and when the cash is gone, well, you’re done spending. As long as you have budgeted the appropriate amounts, you’re fine. If you haven’t, you will find out in a more painful way that will cause you to make some changes for next time.

You can use budgets for some things that are special events in your life and plan those in any way that enables you to keep track and within you control. An event budget can be made for things such as your vacation or a wedding budget. It can be applied to a one-time or unique event that isn’t a part of your everyday expenses.

You need to be on top of all your monthly expenses and must be able to plan for the basics as well such as healthcare, emergency funds, college funds, and the real biggie, your retirement plan. The best way to do that is to monitor your finances with a real working budget. It sounds so simple and it is, but you have to do it and only you can insure your financial success.

Are you frugal? Do you spend on your priorities? Do you have control of your money and are you eliminating debt? Or do you buy wants without a plan? The future is still the part of your life you can influence. Right now is the time you should commit to making your future all that you want it to be.

Image courtesy of Bill Nicholls at via CC 2.0 (with changes)


  1. Great post Gary. A budget reminds me of the project management term – agile methodology. It’s basically a way of running a project where you have the ability to reevaluated and make changes. With a budget you can’t set it and forget it, you have to manage it closely as life happens. If you don’t those leaks will get bigger over time and take you further downstream from you goal.

  2. To avoid those leaks, I simply try to be more strategic about our needs. Instead of running to Target for our household goods (things that I know we actually need regardless of sales or not), I’ll try to find other ways to purchase them. I often resort to subscribe and save on Amazon. That way I know I’m still getting a decent price and I’m not leaving a store with a red cart full of additional things I don’t actually need. Sometimes Target still gets me though, but I’ve gotten so much better!

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