Paycheck Chronicles

Defining "Regular" Spending


I've been doing a lot of thinking about why people spend money that they don't have.  There are a lot of factors, of course:  not realizing that they've overspent, not caring that they've overspent, and thinking that some particular level of spending is normal.  There are a lot of misconceptions about what is "regular" spending, and no wonder!  There is no such thing as regular, despite what your friends or television or advertising wants to tell you.

You can look at the Bureau of Labor Statistics consumer spending surveys, but that only tells you an average of spending.  When it comes to spending, averages don't really mean anything.  In addition to averages, you can look at percentages.  This is a better benchmark, but still flawed, because the percentage of income spent on basic living expenses decreases as income increases.

So, then, how do you figure out what sort of spending is typical?  I'd suggest that you don't want to be typical, because most people are in debt and haven't saved enough for retirement.  Rather, I think you need to evaluate your long-term goals and work backwards.

Define Your Goals

Where do you want to be in 30 years?  Ten years?  Next year?  Figuring out your goals is the most important step in making any sort of plans.

Do The Math

Once you know what you want to accomplish, then comes the simple math of figuring out how to get there.  It may be as simple as dividing the amount you will need by the number of months from now until then.  More complex calculations may include earning interest or higher levels of saving in the future.

What's Left?

Once you've figured out how much you need to save to meet your goals, then you can figure out what you can spend now.  It's entirely possible that you'll have to cut one or the other - very few of us make eough money to meet all our long-term goals and also do all the spending that we want now.

Spend Your Values

One key to being happy with your current income is to be sure that you're prioritizing things that are important to you.  Spending more on things that you love and cutting back on things that don't matter is a great way to feel like you're living rich on a small budget.

We're all different, so there are no right answers. What is not right is spending just because you have some notion that other people are doing it, whether it is getting a manicure or driving a newer car or eating in restaurants. Figure out what's important to you, and the rest will sort itself out.

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