BrightDime Basics: Spending

Last week we talked about income (money you receive) so this week we’re talking about the opposite: Spending.

If income is money that comes in, then spending is just money that goes out. Online bill payments, charges on your credit card, sending money via Venmo, they’re all spending. Some spending is automatic; like subscriptions to Netflix or a gym membership that charges you every month. Some spending is predictable; you probably pay the same every month towards rent or a mortgage, while other types are uneven such as what you spend on groceries, gas, or eating out. There is also spending you can’t exactly plan for, like your car breaking down and needing repairs or unexpected health care expenses and what we call “hidden” spending for things like bank charges, account fees and credit card interest. There’s also spending on yourself – money you intentionally put into savings or investment accounts like a 401(k).

Spending is important because it’s where you have the most control. It’s hard to significantly change your income very often; otherwise we’d all be millionaires. But your spending is in your control; some parts more than others to be sure, but it’s where we can start to make a difference in our financial habits and get on the path to financial wellness. And the first step on this path is keeping your spending to less than your income every month.

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