Types of Spending

August 21, 2023 Kevin Estes | Founder | Scaled Finance

Someone recently said:

I’ve decided spending is basically a hobby. It’s not about fulfilling needs really. It’s a way to occupy our time.

However, expenses are more nuanced.

Current spending is not:

The major spending categories are:

A base level of spending is needed to meet most basic needs like food, clothing, and shelter.

Some people devoted to a religion full-time might get by without money. The rest of us generally cannot.

Spending on basic needs has a high physical benefit and a low psychological benefit.

The extreme opposite from basic needs is pure entertainment.

It’s spending for enjoyment, which includes things like hobbies, shows, and events.

Spending on pure entertainment has a high psychological benefit and a low physical benefit.

Next come expenses due to societal expectations. That’s the spending driven by what those around us expect or require.

We all need shelter but not necessarily a five bed, three bath house with a three car garage.

Taxes fall in this category as well.

At their best, societal expenses provide both physical and psychological benefits.

The last major spending category is insidious.

Addictions can be physical like drugs and alcohol or psychological like gambling and extreme retail therapy.

They often cause long-term physical and psychological harm. All told, addiction is terribly expensive.

Many expenses includes elements of different spending types.

A nice dinner out offers nourishment, entertainment, and social connection.
In addition to providing physical shelter, a home supports entertainment and gatherings.
Food, drink, and dance at a concert provide physical benefits in addition to the live music.

If you’d like to discuss your planned expenses, feel free to…

In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.