Small Expenses That Have a Big Impact

It would be an understatement to say that there are many approaches to managing money. In fact, it seems that no two people manage money exactly the same way. Some people live fugally out of necessity, and some live frugally by choice. Others work hard at saving. And still, some seem to spend lavishly but never seem to run out of money. If there’s one thing that’s certain, it’s that a one-size-fits-all approach to managing money simply isn’t effective – everyone’s situation and everyone’s priorities are different.

But there is one phenomenon when it comes to money that we think is probably more common than not. Though it takes many different forms, most people in Milwaukee, southern Wisconsin, and America in general would probably admit they struggle with those little expenses that seem insignificant at the time but slowly add up to cost quite a bit of money. The biggest problem with these sneaky expenses is that most of us probably don’t think about them very often and before we know it, the money is spent.

As with just about everything in life, you can’t fix a problem if you don’t identify it first. And certainly not every one of these little expenditures is a “problem” – we’re not suggesting that. The key is to be aware of where your money is going and, most importantly, realizing that you are spending it. That being said, take a minute to think about your “small expenses” and whether or not they are adding up to make a big financial impact. That $3 cup of coffee a few times a week may seem insignificant, but it’s a big expense over time. Take this as an example:

One financial planner tells the story of a married couple of young, successful professionals. When they came to him for advice, they explained that, even though they were each making six-figure salaries, had no kids, and weren’t living in an extravagant house, they just never seemed to have any extra money around for retirement or savings or any special projects. After taking them through an exercise where he asked them to think about their “typical day,” he realized they were each making three stops per day for premium coffee—before work, during lunch, and after work. When he did some math, he showed them that they were spending almost $20,000 a year on coffee!

While a story that extreme probably isn’t very common, the phenomenon is all too common. Many of us probably couldn’t spend $20,000 a year on coffee and not notice it, but we probably could do without an extra trip to the vending machine each day, one fewer pair of shoes each month, or packing a lunch from home a couple times a week instead of going out every day. We’d like to encourage you to think if there is anything in your life that you wouldn’t miss terribly, and then calculate how much you spend on it in a week…or a month…or a year. You may be surprised.

Finally, we aren’t suggesting that anyone go without simple joys in life. Sometimes the expense is worth it. We are only suggesting that sometimes money can slip through all of our fingers without any of us ever really noticing it. The key is being in control and acknowledging the small expenses in your life so they don’t add up on you unknowingly. Perhaps the money you save will allow you to take an extra couple days of vacation or buy a car a couple model years newer.

As Milwaukee bankruptcy attorneys, we at Burr Law Office LLC certainly are not suggesting that small lifestyle changes will turn your finances around immediately. Financial planning, which includes considering bankruptcy, requires consideration of many different factors. At Burr Law Office LLC, we’re always ready to help you evaluate your situation and present you with options that you have under the law to protect your own financial well-being, your future, and the future of your family.

If you are facing tough financial decisions, please schedule a consultation with one of our Milwaukee bankruptcy lawyers today and see how we can help you. We are committed to helping good people make the best out of their tough situations, and we are experts at doing it.