The Awful Truth About Your Spending

truth about finances

The Awful Truth About Your Spending

There comes a point in most people’s lives when they realize their spending doesn’t necessarily align with their values. Sometimes it because they tried to stick to a budget and failed miserably. Other times, it’s because they realize they are simply not saving as much as they should be.

That’s exactly what happened with my family’s spending before we finally nipped it in the bud. It was 2011 and we were making plenty of money, but something wasn’t right. Eventually, we started tracking our spending and using a zero-sum budget, and what we found was downright scary. The truth was, we were spending close to $1,000 on food….for 2 ½ people! And we were overspending in other categories too – on things like entertainment, home repairs, and dining out. The result wasn’t pretty.

The Awful Truth: Here’s What We Learned

Fortunately, tracking our spending and using a zero-sum budget did the trick for us, and we were back on track in no time. However, the only reason we were able to make that huge change was because we confronted the awful truth about our spending head-on. It was a painful experience, but it was also eye-opening and totally worth it. Here’s what we learned:

Bad spending habits can hold you back from meeting other goals.

Living without some type of comprehensive plan for your money means you’re basically leaving things up to fate. Unfortunately, bad spending habits can make things so much worse, simply because those leaks in your budget can make it infinitely harder to meet your goals. At least, this is what we found when we finally confronted our own money issues. In our case, the money we were wasting frivolously was holding us back from the things we really wanted in life- security, early retirement, and money for travel.

Overspending in one area means less money for the things that really matter.

Spending far too much on groceries or anything else has to mean sacrificing somewhere else, right? For us, it meant not having extra money to take a family vacation and not maxing out our retirement accounts. Once we started tracking our spending, we immediately began diverting those extra dollars to more important endeavors– things like retirement and college savings, our emergency fund, and our family “wish” fund.

Spending too much can push back retirement and financial independence.

Speaking of retirement, we were always smart enough to save 10% of our paychecks in our work-sponsored 401Ks. However, we hadn’t taken the initiative to open a Roth IRA at the time, nor had we opened any taxable investment accounts. Once we smartened up, however, we began saving at a much higher rate. And now early retirement seems incredibly likely, and not just a far off goal like it used to.

Overspending leads to debt.

The worst part about living beyond your means is the fact that you could on the verge of disaster at any given time. When you spend all of the money you earn, one disaster or emergency could be enough to suck your meager savings account dry. What will you do then? We were lucky that we never experienced a big emergency or event that caused things to spiral out of control. And now that we have an ample emergency fund, we are sleeping much better at night as well.

Taking a Close Look at Your Spending…For Better of For Worse

Spending too much money is easy. Confronting the big mistakes you’re making? Now, that’s hard.

Still, the simple truth is that taking a look at your spending habits only stands to benefit you in the long run. And you never know- making some small changes might be the key to getting more out of life – or even making your dreams come true. But you’ll never know unless you take a close look at yourself and how you’re spending your hard-earned cash.

Just remember, you might not like what you see.

Holly Johnson is a wife, mother of two, and frugal lifestyle enthusiast. She is the co-founder of frugality site Club Thrifty, and travel site Travel Blue Book.  Holly is also a staff writer at Get Rich Slowly, Frugal Travel Guy, and U.S. News and World Report's "My Money Blog." Holly has been featured in the Wall Street Journal, Kiplinger Personal Finance, Fox Business, and Daily Finance.