Living below your means is about being aware of what you spend your money on as well as why you spend your money. You may constantly run to the fast food joint, and this adds up to 2-300 a month you spend on fast food. You want to cut back but you don’t know why you can’t. Consider some of the reasons below for you we spend money and see if you can find a way to plug the leak and save money.

I. Need Purchases. These are those things that are priorities, such as food, shelter, medical care, basic clothing and taxes necessary to sustain life. You can’t fight these, but you can find ways to keep the unnecessary costs down.

II. Investment Purchases. This is savings, checking accounts, stocks, bonds, 401(k), retirement accounts and ways you want to save money. You don’t want to cut back on this area if you can help it.

III. Pleasure Purchases. Purchases to bring pleasure, fun, excitement happiness and intellectual stimulation into your life. Yes, this could include the monthly stop off at the local “bookstore”.

IV. Convenience Purchases. Things you pick up to make life easier or to save you time and hassle like household appliances, dry cleaning services, cell phones, and computers.

V. Ego Purchases. This area is the evil twin of the Pleasure Purchase. These are those made solely for the sake of showing off or giving a status. Many times these purchases are bigger than we afford. Just like our eyes are bigger than our stomachs at times.

VI. Tradition Purchases. These purchases are what brings about the below category. These are items like gifts at work, holiday family gift giving to “prove” you are thinking of them and love them or even seasonal sports tickets when you really aren’t interested anymore.

VII. Guilt Purchases. These items are bought out of irrational fears of what others might think of you or that you don’t measure up in someone’s eyes.

As you go over your checkbook or credit card bills, think about the purchases you have made and why you bought the item. If you find you are doing a lot of ego or guilt purchases- learn from them and better yourself; your savings account will thank you


  1. Clair of Frugal Living Freedom // Friday, April 17, 2009 11:52:00 AM  

    You've hit the nail on the head. Many of our reasons for purchasing revolve around emotions, not logic. We make up a rationale for having done something based on emotions, and that's how we fool ourselves into thinking that our spending is reasonable.

    The one that gets me is the "convenience" excuse. Some of us will pay 10 times the price of something just because of the convenience. For example, $2 for a soft drink out of a vending machine. For a 90% savings, I'll figure out a way to get it myself and perhaps put up with a little inconvenience, especially if it's a big purchase or a regular purchase.


  2. Rachel // Sunday, April 19, 2009 9:44:00 PM  

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  3. Dawn C // Monday, April 20, 2009 10:44:00 AM  

    @Clair of Frugal Living Freedom
    I think that is why it is fun sometimes to sit back and REALLY watch commercials, watch what emotional buttons they are pushing.
    If I look at them logically - most of the commercials are hilarious.