Where does all of our money go?

This weekend, I did it again. I went shopping and spent too much money. I did not buy anything big, just all of the things that my family and I need.

Looking at the total on the bottom of my receipt, made me stop and think. What is really necessary? We slowly get used to more & more stuff, and before we know it, it is hard to tell the difference between our needs and our wants.

Instead of buying Suave shampoo (on sale for .99) like I used to, I now buy a more expensive shampoo that cost about $3.50. Is that cost increase really necessary? All of my little cost increases can really add up, and my hair does not even look or feel any better than it did before. Although this represents a very small piece of my financial puzzle, I wonder why many of us spend extra money, when we don’t really need to.

Money is a powerful resource. We strive to acquire it and we are told we cannot survive without it. It represents glamour, prestige, power, security and happiness and no matter how non-materialistic we may strive (or claim) to be, in the end, much of our life revolves around making money and spending it. And, we certainly spend tremendous mental and emotional energy thinking about it.

What is the difference between or needs and wants?
Our actual needs are pretty limited: food, shelter and clothing. Just about everything else is a "want," and our wants are essentially endless. Almost all of us have limited resources, so we have to make choices about which wants to fulfill.

The way we fulfill our needs also involves a lot of choice. Shelter, for example, can be a bed at a homeless shelter, an apartment, or a $1 million home. Our food choices offer similar extremes, from beans and tap water eaten at home to steak and Dom Perignon at an exclusive restaurant.

I think that many people believe they have to spend money in certain ways or in certain amounts, when in reality their spending is a choice -- or is at least based on choices that have been made in the past. For example, if you have a huge mortgage payment, it's because you chose to buy a big home and select a particular mortgage.

A hard, cold look at how and where we spend our money can show us – often in a painfully clear light – why we may experience financial difficulties from time to time. This, of course, is one of the main reasons that so many people resist examining their monetary habits and belief systems in the first place.

For more information on learning how to properly budget your money, take a look at our free Balance Fitness Program.

Balance will help you develop a workable spending and savings plan, we want to help. That's why we've provided access to free and confidential financial counseling and education through BALANCE.