What Is A Waste Of Money?

There’s been a graphic circulating in the personal finance world the last few days. Recent research shows that the “average american” spends about $18,000 a year on non-essential items like eating out, cable, streaming services and subscription boxes.

I’m sure we can all agree that eating out and cable aren’t essential, but where’s the line? How much is acceptable to spend, and on what?

I’ve been saying to you for a while that I believe personal finance is personal. I also believe there is no universal waste of money. What you spend money on should be things that are important to you. Those things are different to everybody.

I love getting my lashes done, and to some that is a waste of money. To me subscription boxes are a waste of money because I probably won’t use everything in it.

How Much Should I Spend On Non-Essentials?

This will of course depend on your income, whether or not you have debt, etc. If you go by the 50/30/20 rule, then 50% of your income goes to essentials, 30% to wants, and 20% to savings.

If you don’t spend 50% of your income on your needs then you may be able to funnel a little more into wants.

That’s where I think this graphic is a little misleading. If you make $30,000 a year, then yes $18,000 is a lot of your income. But the “average american” income is about $56,000 a year, so $18,000 is about 31% of their income, meaning it mostly plays by the 50/30/20 rule if you assume that the other categories are allocated properly.

Read more about budgeting here

What If I Have Debt?

If you follow Dave Ramsey, then he would say that if you have debt you should be gazelle intense in paying it off. However I don’t agree, as you’ve probably noticed, we’ve been traveling while paying off debt. If you have a small amount of debt that you believe you’ll be able to pay off quickly, then maybe it makes sense for you to knock it out of the park for a few months. We knew we would take around 2 years and I didn’t want to be eating ramen for a year and a half in order to pay it off faster. Not giving yourself any money for wants for a long time may also cause you to binge spend, which isn’t good for your mental health or debt repayment progress. I’m a fan of the marathon-not-a-sprint mentality!

Why So Much Hate For Non-Essentials?

Personal finance bloggers and financial experts love to throw things like takeout coffee under the bus because people often say that they can’t afford to save, when in reality they are overspending on things that aren’t a “need”. While I totally agree with them, I don’t agree that you should have to live as frugally as possible in order to save money as long as your needs don’t take up too much of your budget. With a properly balanced budget you get to enjoy life and save for the future!

So What IS A Waste Of Money To You?

These graphics can be helpful if you use them to evaluate your own spending and see what you think a waste of money is. I think the best part of managing your money is that you take control and you can allocate funds into whatever you want. If you think $189 a month on drinks is ridiculous, then cut it out. If you meet friends for brunch once a week and love the quality time with them, then keep doing it (as long as you aren’t going into debt to do it)!

As for us, we’re going to keep traveling, going out to eat occasionally, and I’m going to get my lashes done because money is also for enjoying life, not just paying bills.

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