Where does the money go?

[BigNick]

I have a simplified theory of where people spend their money. I reckon that, once you've put a roof over your head and paid for utilities, health insurance/deductibles if you're American, and orange juice to put in the fridge, there are five major categories of ways to burn the rest:

1. Clothes - serious fashion shopping, not $25 jeans
2. Eating out, drinking out, etc
3. Home stuff ("the one who dies with the most stuff wins")
4. Cars - replace every 2 years, 3 cars in the garage
5. Travel

Note that I don't count FIRE savings in there, nor college fees which I assume people also save up for (and which I don't regard as "burning" money, although it depends if your kids are majoring in surfing, I guess).

DW and I make the kind of money where we could afford to do perhaps 3 of those and still save a little. As it is we do #5 quite a bit, #2 and #4 very modestly, and save a lot. We know people who make a lot less than we do and do #1 through #5 like they're going out of fashion.

Anyone else have a model like this? Or a category to add?

 

[Khan]

I have a simplified theory of where people spend their money. I reckon that, once you've put a roof over your head and paid for utilities, health insurance/deductibles if you're American, and orange juice to put in the fridge, there are five major categories of ways to burn the rest:

1. Clothes - serious fashion shopping, not $25 jeans
2. Eating out, drinking out, etc
3. Home stuff ("the one who dies with the most stuff wins")
4. Cars - replace every 2 years, 3 cars in the garage
5. Travel

Note that I don't count FIRE savings in there, nor college fees which I assume people also save up for (and which I don't regard as "burning" money, although it depends if your kids are majoring in surfing, I guess).

DW and I make the kind of money where we could afford to do perhaps 3 of those and still save a little. As it is we do #5 quite a bit, #2 and #4 very modestly, and save a lot. We know people who make a lot less than we do and do #1 through #5 like they're going out of fashion.

Anyone else have a model like this? Or a category to add?

Buy enough clothes to keep myself covered and comfortable
Go out to eat maybe a few times a year
Home stuff is only replaced as it wears out
Cars replaced as they wear out (previous one lasted 18 years)
Travel rarely (flew in Dec for first time in ~15 years)

I enjoy giving stuff and money to people/orgs/causes

 

[Ronstar]

Wow,

Those 5 sum it up very well. I can't think of any of our expenses that don't fit into one of those 5.

#1 - frugal - I spend less than $300 per year in clothes
#2 - frugal - probably eat/drink out only twice a month (except cheap fast food)
#3 - not so frugal - spend $ on new tech gadgets, oversized primary home, vacation home
#4 - average frugality - have 4 vehicles, 3 over 10 yrs old.
#5 - average frugality - rarely go anywhere except vacation home

 

[LOL!]

My spouse would give her entire income to charity if I let her.

 

[audreyh1]

Hobbies.

I don't think that counts as "home stuff"

 

[FIREd]

6? "sins" i.e. alcohol, tobacco, lottery tickets/gambling, etc...

Personally:

1. not so frugal on clothes. Buy good quality clothes but keep them much longer than most people keep their clothes.
2. frugal. rarely eat or drink out.
3. not so frugal. I am a homebody. My home is my castle.
4. frugal, 2 cars replaced every 10-14 years.
5. average frugal. Take maybe 1-2 trips a year. But my annual travel expenses were on the low end of the ER spectrum IIRC from a previous thread.

 

[bbbamI]

Where does the money go?

Marshmallows and beer.

 

[waltwill8]

1. Bought a suit. First time in 25 years (working out - shoulders too big for the old one)
2. Only when traveling.
3. Everything was paid for years ago. (except ground source heat pump - 1 month left on payments)
4. Gave away 11 yo car to niece. Bought a new Hyundai Sonata. Vroom (and it's red!)
5. Can't keep up with friends (Africa and Antartica in the same year!), but, Carribean, spring training in FL, and Rome. Do it, while you can!

 

[Martha]

What happened to sex, drugs, and rock and roll?

 

[MasterBlaster]

I spent half my money on booze, sleazy women, and wild times...

And the other half I just wasted.

 

[W2R]

Fitness (expenses such as gym fees)

 

[KingB]

I spent half my money on booze, sleazy women, and wild times...

And the other half I just wasted.

LOL.

 

[MDJO]

Giving to foodbank, hospice, college, other charities

 

[Moemg]

What happened to sex, drugs, and rock and roll?

Now it's Cialis , Metamucil & mood music !

 

[Moemg]

My grandson , my daughter & charity !

 

[jerome len]

how about gifts? I spend a bunch on kids and gradkids at Christmas and their birthdays.......more than I spend on eating out or on clothes. gifts for a great wife as well.

 

[Moscyn]

Clothes - still buying but very wisely indeed.
Eating out/drinking out - well. with the time I have now I discovered I'm a good cook and we since we have a wine fridge, drinking at home is less expensive. Also, gives me a chance to practise on wine pairing.
Spend very little on the home stuff as big items were purchased before retiring.
Car has been with us for 5 years - no intention to change soon.
Travel - oh yeah - one of my favorite activities. Usually 2 long hauls and 3 short hauls per year excluding week end trips.

Other categories include exercise related expenditure like gym, golf, yoga. Also am a sucker for beauty regimes like facials and massage.

 

[chris2008]

1. Clothes - well balanced, some new pieces every year to replace worn outs but classics preferred
2. Eating out, drinking out, etc: 2xp.M. is much, except when travelling
3. Home stuff ("the one who dies with the most stuff wins") : we like what we have and do not need much more, so mostly replacements if beyond repair, we are not into decoration items
4. Cars - replace every 2 years, 3 cars in the garage: company car also for private use and a 12 year old for DH
5. Travel: we love to travel but do not spend extensively on hotels and restaurants. No de luxe travel for us.

 

[BigNick]

I like "hobbies". Owning a boat or a horse can put a fair-sized dent in your wallet. I'll add that to V2 of the list.

Perhaps "charity" and "helping out kids" could go in their own category too. That would also absorb "saving for college". They all come under "spending money not on yourself". One reason why I didn't list this first time round is that, in theory, it's something you can cut back on without noticing much impact on your lifestyle, although of course your kids are hard to exclude from your lifestyle.

I'm not sure about "alcohol/tobacco/gambling". Alcohol is cheap if you drink it at home (unless you do it to the point where it affects your ability to work ) and if you drink it outside, that's covered. Tobacco is such an alien thing to me that I didn't think about it, but I know that for people who make below median incomes, 30 a day can be a big chunk of change (especially in Europe where $8 per pack of 20 is not uncommon). I'd probably include gambling under "hobbies".

 

[Walt34]

1. Clothes - serious fashion shopping, not $25 jeans
2. Eating out, drinking out, etc
3. Home stuff ("the one who dies with the most stuff wins")
4. Cars - replace every 2 years, 3 cars in the garage
5. Travel

Not so much on any of those. We don't travel much outside the local area, spend little on clothes, our cars are 8 years old and we plan to keep them until the wheels fall off, and we go out for meals perhaps once or twice a month. I still have a jacket purchased during the Nixon administration.

Two years ago I did splurge on a motorcycle which overall probably costs a bit more than a small car to run (You're doing well to get 10k miles out of a set of tires, which are ~$150 each. They're made of softer rubber to grip the road better but don't last as long.)

Neither one of us shops as a form of entertainment. DW spends a lot of time with family and is her nephew's "emergency babysitter" which she enjoys doing.

Lately I've renewed an interest in photography and of course there's no upper limit as to what one can spend on that. Truth is I'm the bigger spender than DW is and I have to hold myself in check to keep from going overboard on stuff by asking "In three years will I still be glad I bought this?"

 

[Sarah in SC]

1. Clothes - serious fashion shopping, not $25 jeans
2. Eating out, drinking out, etc
3. Home stuff ("the one who dies with the most stuff wins")
4. Cars - replace every 2 years, 3 cars in the garage
5. Travel
Anyone else have a model like this? Or a category to add?

I like your list and I agree, different folks have different priorities for how they burn through money. As others have noted gifts/charity would be a good #6.

I'd say for us 2 and 5 are the most important. We like throwing parties, visiting with friends, and generally value experiences over things.

I'll work like crazy to save $40 on some purchase, but then will drop that much easily on drinks tonight during happy hour.

 

[BigNick]

One slightly naughty feature of this list approach is that it provides a quick way to see how your friends are probably doing. If they are buying furniture every odd-numbered weekend in their new car, and away somewhere every even-numbered weekend eating at fancy restaurants in their new clothes, they probably don't spend much time looking at annuity rates.

 

[REWahoo]

What happened to sex, drugs, and rock and roll?

This question seems to be asked a lot once you reach your 50's. Once you make it to your 60's the drugs question usually gets answered...

 

[FinanceDude]

I'll work like crazy to save $40 on some purchase, but then will drop that much easily on drinks tonight during happy hour.

Next time I am in Charleston, you're buying..............

 

[jimnjana]

B

I enjoy giving stuff and money to people/orgs/causes

Thanks Khan... My own thinking of giving has changed since I ER'd. I use to think that simply paying my taxes was giving enough...Our percentage of giving has gone up in terms of time & dollars. Still have a way to go though...