Reimagining Relationships with Expenses
What I'm Up To (executing finance overhaul), What I Reflected On (Relationship w/ Expenses), and What's Occupying My Mind (February)- all part of Allen's Friday Flights
Hello Professionally Curious One!
Happy February 3!
Today’s reflection is on relationship to expenses, heavily playing into Adlerian Psychology and Human-Centered Design.
Cheers,
Allen
Past Publications
3 Things I am applying to My Writing Goals So Far + Examples
Rebuilding My Personal Finance Stack + The Best Psychology Book I've Ever Read
What I’m Up To
TL;DR: Going at re-learning finance hard.
The Things
I learned about Solo401ks (Rachel), I Bonds (Christina, Mark, and Jason), and the shitshow of Crypto Finance (Vidur and Camille)
Here’s my California guide on saving $300 on legal incorporation
Downtown San Juan Capistrano is lit. 10/10 for chill, low energy, afternoon tea filled dates.
I’m 28 out of 30 days of writing atomic essays on LinkedIn/Twitter. Such an underrated skillset to pick up.
I might be a guest speaker at UCR and CSULB this Spring. IDK what I’d talk about, I ain’t offering employment… (inside joke to student orgs who only invite back working professionals from smexy companies b/c they bring jobs)
Hi-Fi Rush is such a great game. If you like corny animes, comic books, Borderlands, combos, rhytmn, and Nine Inch Nails, this is for you. Also if you are not getting your dopamine from your current shooter, FPS, or backlog of games, this game is also for you.
What I Reflected On
TL;DR: The Relationship to Personal Income and Expenses
Reimagining Relationships with Expenses
I’ve been putting a lot of work toward creating systems and processes that govern and execute on my personal finance stack. I’m undergoing a reconstruction now to fit the needs of my next 5 to 10 years.
A genuine bane of my existence when it comes to personal finance is the approach around expense reconciliation, and the related cash out flows. Specifically, the processes and technologies involved.
When I think about budgets, at a surface level I think of income sources and cost centers.
Here’s an example for income sources (Cashflow in):
When I think about cashflow in (income), I innately think of my sources. This could be anything around “Client 1” to “Employer 3” to “Fund 2” etc. A lot of apps and gurus think of it this way too.
It’s easy to calculate the number - take the report or statement for each line of work, whether its a paystub or earning statement, and move on. You can’t get more definitive than an earning statement when it comes to your income.
When we flip it and look at the expense side and cashflow out activities, I often see this unspoken habit of going straight into cost categories:
One could argue that the opposite of a cash inflow (income source) is the cost center. You’re right, but why are we going for opposites here?
One thing I am aware of is that any cash inflows (income) made is income I am proud of, or at the very least, have a positive relationship with. (e.g., contracting work, investment income, rental property? income, W2, etc).
If we adopt the idea that expenses are the opposites of inflows, one could argue expense are things not be proud of, or at the very least, a negative relationships. However, I believe cash outflows (expenses) can also be things I can have a positive relationships with.
I make this broad assumption about money:
Not every dollar going out carries the same weight.
$100 spent on yourself carries a different weight than $100 spent on your SO or family, which also carries a different weight of $100 spent on future self.
Because of the different in meaning, it’s important to recognize the intention and value behind an expense, and WHO it is for. If you want to be mindful and consciousness, this is how you do it.
I have been thinking about my relationship to my own expenses and how ultimately every expenditure I ever make as an underlying WHO component.
For “Who is it for” and “Why does that matter to me?”
Taking this approach, I’ve created this visualization of expenses / cashflows out.
And like this, you’ll start to realize your relationship value hierarchy. Certain cultures and upbringings emphasize certain expenditures more than other buckets. Those are not wrong, it is how people-based value get assigned and cultivated.
You get to choose if its meaningful or not.
If you want to be more mindful and create a positive relationship with your spending, ask the questions:
“Who was it for?”
“What did it mean to me?”
I believe when you contextualize your spending to the human intentions you have, you’ll find a lot of insight on where you can not only reduce, but re-allocate where your expenses (and cash outflows) go.
What does your spending mean?
Perhaps you value family more, and so “Ours” should increase and “Mine” should decrease. Perhaps you show your love and appreciation of others through “Theirs”, and that brings you satisfaction. Perhaps you noticed that you spend on a lot on others, and $0 on yourself.
You won’t know these things looking at a bank statement or credit card statement. You have to reflect on your inflows and outflows, and decide what they mean to you and if its worth continuing or decreasing.
Hope this helps reframe your relationship to expenses, spending, and outflows. Ultimately we reduce cash out in one category, so that we increase its impact to another category. It’s double sided - so focus on the good side of it more.
Whats on My Mind
TL;DR: If you make it through February you’ll be fine for the year.