Spending Reflects The Individual

I can tell more about a person by looking at their spending then I can from a long conversation with them.
— Aram Hava

Expenses, when tracked and recorded, reflect the individual, one’s lifestyle, consumption patterns, desires, values, and even one’s world view. You can tell a lot about someone by simply looking at their expense list. Expenses are the reflection of us, of how we choose to use our money to express our life’s needs, wants, desires and ambitions. 

Expenses can be viewed as the bottom of the “financial pyramid”, but they are truthfully the primary reason for the pyramid’s need to exist. This category is foundational because it is the reason. We work hard, we accumulate assets, we generate income for what? What’s the point of all this economic activity? In capitalist systems of all sorts, eventually, the point of productivity is increased consumption. We do what we do to make money and increase our wealth so it can be spent in a manner that enriches our lives, and the lives of those we care about. 

Enriching our lives through consumption can be as simple as enjoying a nice meal at a restaurant, to buying a house to raise a family in, all the way up to accumulating million/billions of dollars and effecting change on a societal level. We can accumulate and give back to our communities in various ways, we can also simply live large, empty as it may be, the majority of the world simply aspires to accumulate enough to be able to enjoy the “Western lifestyle”. Spending is an enrichment of our lives, in any level, and it is the reason we all participate in this system, it is the reason for the way we transact.

Expenses as a category are not inherently good or bad, they are however, fundamental. Nevertheless, when it comes to our personal finances and personal spending, expenses need to be reflected upon deeply. Our spending patterns can make or break our future financial well being in many cases. What we choose to spend our money on today, can impact our future selves in ways that are often times difficult to comprehend. Often times, most individuals do not reflect deeply upon their spending, and at best simply get a monthly glance. In order to control and reflect upon one’s spending, we must fully track all elements of our spending patterns over time, class, category, and transactions.

When it comes to one’s personal finances, you obviously do not want to spend what you do not have, but what you do have, you should want to spend wisely. Sure, you can choose to be impulsive at times, but spending in a non reflective way is a mistake both for financial and spiritual reasons. Reflecting on your spending is critical in controlling your finances in the long run. Excessive spending is a reflection of an excessive or even unstable life. While frugal spending indicates control. However, one should strive to find a happy medium based on one’s own financial standing.

But I need it!!!! Here’s the truth, needs are subjective. Maslow’s hierarchy of needs are universal but the degrees of each category are not, there is a wide spectrum of ‘needs’. Everyone needs shelter, but not every house is equal. Thus, not every rent or mortgage payment is either. One does not NEED to spend excessively on housing, but one certainly does need housing. Same goes for food, and healthcare, and other basic necessities such as  communications, transportation, and basic essentials. 


3 Expense Classes

  1. Essential

  2. Excessive

  3. Actualized

So what is essential? Essential is the baseline. What you cannot live without. Everything above this baseline is a form of Excess (non-negative). Nothing wrong with excess, it is all around us and it is what make our lives spectacular. Beyond excess however, lays Self-Actualization, the class we are all really aiming for, whether knowingly or not. This class is going to school, starting a business, giving back to our communities, helping others, working on something we are passionate about, and/or self fulfilling/actualizing ourselves in some other way. However, when one lives in excess that is uncontrolled and unintentional, one cannot reach the 3rd class of expenses (past essential and excess): Self Actualization. In order to reach this class, which we should all be able to, first essentials must be covered and stabilized. Excess must be tamed to a healthy degree, and the rest of one’s spending should be aimed at self actualizing and continuous investment.


Essential Expense Categories:

  • Housing: Mortgage vs. Rent + Utilities (Electricity, Water, Gas)

  • Food: Eating at home vs. Eating out

  • Transportation: Owning vs. Sharing

  • Communication: Cell phone plan vs. bundle plan (Internet can be removed from Utilities this way, but not so convenient)

  • Insurance: Health, Home, Auto, etc.

  • Health Needs: Gym, supplements, therapeutics, hygiene, etc.


“Excess” Categories:

  • Purchasing goods: fashion, electronics, furniture, supplies, etc.

  • Purchasing services: professional, cloud/online, entertainment, etc.


Self Actualization Categories: 

  • Business

  • Investments

  • Causes/Beliefs

  • Education

*The Budget

The Budget is a projection tool, it’s function is to control one’s spending based on predetermined/premeditated planning. In essence a budget is simply a planed P&L (Income Statement). Typically, income is given, and expenses are the elements that are planned for ahead of time in order to avoid deviation from planned spending amounts given whatever one’s goals may be.

The truth is budgets are overhyped, for people who are not self-disciplined. This is an unpopular view, but it is true. For someone who has no idea what their spending patterns look like and has little to no financial control, then budgets are great tools to getting oriented and gaining some basic control. However, the nature of budgets are rooted in contraction and control, not expansion, and they should not be served as a general practice to most people who do in fact understand their spending patterns. If you know your spending patterns you don’t need to budget. If you lack control, then budget away.

To Sum It Up

Expenses are fundamental, they should be well understood and placed in context for one to reflect upon as part of the larger structure of personal finance. Expenses reflect the individual, they are an expression of ourselves. Spending patterns and behaviors should match our Goals. If they do not, then expense control/contraction is needed. Otherwise, we expand in order to self actualize. This core principle of personal finance must be supported thoroughly, since if expenses are expressions of an individual then to support expenses is to support the individuals expression of self. This doesn’t mean fancy and complicated support. This means clean, and elegant support. An expression of data from the past to support an expression in the future

In the following section, the strategy chapter, we discuss determinism and indeterminism. The 3rd level of expenses is based on these outlooks. It is a level of spending in which investments are made, in which risks are taken, and in which sophisticated protection measures can truly take place. This level is non-essential, it is excessive and actualizing, it is the extra layer of spending that makes you set up an investment account for your grandchildren, give to a charity you believe in, start a business, contribute to a campaign, go to school, and express your spirit. These are self actualizing activities that can truly only be pursued fully once the essentials and some of the excess are met, nevertheless, this is the level we all aspire to reach and maintain for as long as possible. 

Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.
— Dave Ramsey

Next Step -> Strategy