Understanding Your Spending Choices

You just received an unexpected bonus at work and you’re ecstatic. There are so many ways you could use this money… but how do you decide what you will do? Should you pay off some bills? Save it? Buy that item you’ve been dying to have? There is no right or wrong answer to your dilemma. Ultimately, the decision you make is personal. How you come to that decision will be based on a myriad of things… your values, your goals, your emotions, and your current financial situation.


When it comes to spending money, we often make choices based on our values… those things that are important to us. Values direct not only how we spend money, but how we live our lives and how we make our choices. These values are developed over time and stem from our past experiences. If we value education, we may save for college for our children. If we value time with our families, we may spend money on weekend activities or family vacations. There are no right or wrong ways to spend our money. Each person or family will make their choice based on what is important to them. Values also give us direction in setting and prioritizing our financial goals.


Our goals also often direct how we spend money. Goals are specific plans or objectives we wish to accomplish and are based on our values. Perhaps we have always dreamed of owning a home. Since homeownership generally requires a down-payment, that goal will direct us to save our money… especially any ‘extra’ money we may have. If our goal is to live without credit card debt, we may think purposefully before we make purchases. We may find ourselves asking, “Do I really need this?” if we don’t have the cash to make the purchase. Goals are reached through careful planning and provide a roadmap to guide us in the choices we make. The more specific our goal, the easier it is to reach.


Our emotions are another factor in how we spend money… and they don’t not always work to our best advantage. Our emotions can often lead us to make purchases or otherwise spend money on things we don’t need or even want. Just as ‘eating’ our emotions can lead to negative health outcomes, ‘spending’ our emotions can lead to poor financial choices. One great example of potential emotional spending is purchasing a vehicle. When shopping for a vehicle, it’s a good idea to have a budget set and to know what features you need and are looking for. Too often, vehicles are purchased while in a highly emotional state because of the excitement of getting a new (or new to you) car. We may end up paying too much and going over our set budget because we just have to have it, without thinking about the consequences (can we really afford the payment).

It’s best to take a cooling-off period before making such big decisions. Of course, our emotions play a part in small spending choices too. Why do we shop where we do? Do we need to buy name brands to keep in line with everyone else when generic brands would do and cost less? Keeping our emotions in check when it comes to spending can be hard but recognizing the role they play and putting real thought into how we spend our money can help us make good choices.

Financial Situation

The final factor used in making decisions on how we spend money is our current financial situation. If money is typically tight, we may be more willing to splurge on items that we might not typically be able to afford when extra money comes our way. Or we might save that money for times when we really need it. If our income covers our expenses but we have debt, we may choose to use the money to make extra payments to reduce our debt. Taking a real good look at our current financial situation can often help direct us in making good decisions for the use of extra funds so that we can make the most of it.

Understanding the factors that go into making spending choices is important in helping to make the best decisions. Whether it’s unexpected income or our anticipated monthly income, we can control our spending and direct our money to make the most sense and put us in the best financial situation possible.



Posted: September 29, 2021

Category: Money Matters, UF/IFAS Extension, Work & Life
Tags: Choices, Emotions, Finances, Goals, Money, Spending, Values

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