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4 Types of Spending

In this article, I would like to narrow down valid channels of expenses. This is relative to the financial management discipline, focusing on personal spending rather than organizational budget management.

Have you ever wondered where your money goes when the amount of money in your account is getting smaller and smaller towards the end of the month? A start to better manage your budget is to know where all the money goes. At a high level, you can utilize the categories of spending that I am describing below.

If you would like more insight on your spending, you could look into personal accounting software if you are self-employed, or why not try out a finance app such as Numbrs from Centralway (available on iOS and soon on Android), which combines all your online banking and spending information into a sleek and useful centralized interface.

Dictionary.com defines spending like this:

“to pay out, disburse, or expend; dispose of (money, wealth, resources,etc.)”

I could identify the following four major types:

  1. Impulse buying
    Emotional spending is required for ad-hoc desire and/or demand fulfillment.
  2. Fixed costs
    Spending is required to cover either fixed or semi-fixed expenses for living and lifestyle costs (a home loan, for example.)
  3. Investment
    Financial investment is being made with the goal of increasing the overall funds.
  4. Ethical or social spending
    Loans or donations are being made without a fundraising drive (a good way of doing that online is the crowdsourcing portal “Kiva”).

In general, for all things investing and financial terms, I recommend Investopedia.com. They are “the Wikipedia of finance” and also have great educational videos that explain terms. My favorite is the Fat Cat CEO.

If you believe there are more types or if you have any other feedback, don’t hesitate to drop a comment below. Other than that, I hope this was a help in order to bring more transparency to your spending behavior.

This article has been previously hosted on my no longer maintained blog and was originally published in 2012. If you’re looking for a way to educate your children about spending, you can also have a look at our article on Pigzbe, the digital wallet for kids.

Happy spending!

Photo credit: The feature image has been done by Thomas Galvez.
Editorial notice: This article has been made possible by site supporters.

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Christopher Isakhttp://www.christopherisak.com
Hi there and thanks for reading my article! I'm Chris the founder of TechAcute. I write about technology news and share experiences from my life in the enterprise world. Drop by on Twitter and say 'hi' sometime. 😉

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