There are a lot of reasons to spend money. Sometimes it is because there is some item we want. Usually (aside from non-negotiable bills such as water and trash) it is because spending money on the item gives us an emotional benefit.  If we identify what that emotional benefit is, we can often fill that in a less expensive way.

Let me elaborate.

Money Guru David Bach, author of Smart Women Finish Rich, uses the example of a daily latte to show how we can all squeeze a little extra from our daily budget whether we know it or not.  You may have heard of this example.  For some, the idea of having the extra cash to spend on a latte would be a dream come true. For others, the idea of cutting back on something so integral to their well-being is a nightmare.  His point, of course, isn’t that we shouldn’t drink coffee, but that we are often spending more money on the little things than we realize.

But we need our lattes.

Lattes are warm and comfortable. They reassure us on those days when it is cold walking from the parking lot to and from work, or they can encourage us down on the hectic mornings when we have an early-morning deadline, or they can reward us when we have a difficult time getting everyone out of the house with everything they need for the day.  A latte can mean a leisurely few hours with a book, or some time reconnecting with a friend at a coffee shop.

Warmth. Reassurance. Encouragement. Reward. Leisure. Friendship.  

This is what we buy with that small amount of money. The purchase of a latte means that we exchange a few dollars for all that, not just a hot cup of bean juice mixed with cow milk.  And this is why “budgeting” alone is so difficult– we can do without our lattes, but we avoid asking friends out for coffee, we arrive cold at work, or we return after dropping the kids off feeling deflated.  We spend our money on emotional needs, and when we budget, we don’t often know how those emotional needs can be filled.

I’m using the latte as an example because many money

 people do.  It’s not just about the latte, however.  Today I was in a waiting room for a couple hours and read their entire collection of ladies’ magazines, looking for money-saving ideas and reading articles about the wonders of modern science as pertaining to reproductive facilitation. It surprised me that many of their articles on money saving usually started with buying something — you could save money on a birthday party by buying a cheaper cake, you could save money on fashion by buying this innexpensive blouse, or save money on home decor by buying the materials and making the placemats and tea lights yourself. 

But at the end of the day, the cake gets eaten, the blouse gets thrown out with pit stains, and the decor gets stored and replaced with something fresher. 

But think about why you’re buying it to begin with.  We buy cake to celebrate. We buy fashionable clothes for any number of reasons, such as impressing others or expressing ourselves. We buy additional home decor because we want to provide a home that feels comfortable to us and that others will want to live in or visit. 

Those last a lot longer than the cake or blouse or tea lights. And that’s why we keep coming back with our pocketbooks open, smiles on our faces, whether we are on a budget or not.

I like to read materials from the library, but I also like to buy books because I like to keep them forever and loan them out to my friends. Ownership, provision, knowledge. I could get a cheaper home, but I like the space, location, and features of this one.  I like to be here, to have my friends over, and to have them be comfortable.  Destination, provision, friendship, comfort. Sometimes I enjoy going out with my friends for lunch even if it’s cheaper to eat what I’ve brought from home. I like to take a break from the workday to connect. Friendship. Relaxation. Connectivity. Sharing. 

We all have our different needs. 

Of course, once you realize what you are really spending money on, you can come up with other ways to fill them. Would my need to connect with friends be satisfied if I were to forego lunches but meet with friends to walk together after work? Would my need to provide be fulfilled if I volunteered at a homeless shelter? Would I get the same emotional pick-me-up from the office coffee as from Starbucks? Would I feel just as connected to my friends if we went on a drive to the mountains instead of the mall?

Only you can identify the emotional needs that are filled with items on which, right now, really are neccessities for you. And maybe you’ll find that when you identify them, you’ll be able to address them directly.