Ditch the Fake Math: How Your Spending Habits Impact Your Budget

Money Files

In this episode, I explore how different spending styles affect our lives and finances. If you’ve been listening to my podcast, you know I’ve been exploring the concept of “fake math”—the way we make estimates instead of using real numbers to create our budgets. 

Today, I explain the characteristics of four common spending profiles and how to identify which category you fit into as a spender. Then, I outline how your spending behaviors contribute to fake math in your budget and give practical advice to shift your mindset so you can better align your spending with your financial goals. Regardless of which profile you identify with, it’s important to reflect on how you manage your money. 

As we move into the New Year, I encourage you to be intentional about how you spend your money, think about planning for the future, and eliminate fake math in your budget.  

Tune in to learn which of the four spending profiles you identify with and how to avoid fake math in your budget …

  • [01:51] Profile #1: Feast and Famine Spender
  • [06:04] Profile #2: Treat Yourself Spender (YOLO)
  • [09:40] Profile #3: Frugal Hoarder
  • [13:06] Profile #4: Millionaire in the Making
  • [16:30] Questions to help reshape your spending

Tune into this episode of Money Files to learn the four common spending profiles and how your spending style causes “fake math” to show up in your budget.

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If you loved the discussion about spending profiles, check out my episode on, Smart Spending: A Simple 5-Day Challenge!

Transcript for “Ditch the Fake Math: How Your Spending Habits Impact Your Budget

Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.

Keina: Hello and welcome back to another episode of Money Files. So I thought it would be a great idea to dive a little bit deeper into fake math. So if you have been listening to my podcast, you know that I talk about fake math and it’s really this idea around the estimations that we make when we think about how we’re spending money and we’re not actually using real numbers to help us actually identify how money moves in and out of our lives. And I have been reflecting a lot on how fake maths shows up with different spending styles, how it shows up around the holidays. I’m going to do something around gift giving as well, especially since we just came out of the holidays. But today I specifically wanted to talk to you guys about your spending style and how fake math can show up. So I want to dive deeper into this because you probably fit into one of these profiles.

I may not have found all of the profiles, but these are the profiles that I see oftentimes with clients and how I can identify within probably 10 minutes of talking to someone like what their issue is when it comes to having a better relationship with money. So I hope this episode helps you identify where you might have blind spots that are impacting how you experience like managing your money, how you experience whether or not when you open up your accounts you feel really great about your accounts, or maybe you’re someone hiding from your accounts because you don’t like what you see. So the first profile I would call my feast and famine spender. So the feast and famine spender, they often go into, well Keina I don’t really spend that much money. I don’t spend like that. But if we dive deeper into their spending habits, what we’ll find is “they don’t spend” and I put that in air quotes, but they have these really big peaks in their spending because they splurge when they do spend.

So they have periods of time where they have deprivation and then after they deprive themselves, they give themselves permission to spend. And what’s dangerous about this type of mentality, dangerous, maybe that’s a really aggressive word. But what’s dangerous about that mentality is that if you have that type of belief, if you have that type of mindset, when it comes to actually doing the math to develop a budget or to think and reflect on your spending, you’re going to be most prone for not being honest with yourself. Because when you think about yourself as a spender, you would categorize the fact that you don’t really spend a lot of money. And it is true that there are times in which you can have long periods of time where you’re not spending money, you’re just doing the spending on your groceries and the gas and have different bills.

But if we looked at your spending in a 6 month increment or a 12 month increment, what we would find is that you actually have these binge spending. What we would find is that you have binge spending. So you have moments where you might decide to book a trip and it’s $2,000 and you can easily justify it in your head because you haven’t been spending money in the last few months. Or you might decide to make another large purchase like a TV, or you may treat yourself to a spa day that’s $300, $400. Because the way that you justify it is that you haven’t been spending money so whatever you’re spending on in your head, you feel like it should fit. But because you don’t actually understand yourself and your spending patterns and you’re not acknowledging the fact that you have these splurges, you are going to miss, when you go to budget, you’re going to miss planning for those splurge moments.

When I work with clients like this, I want my like feast and famine spenders to actually just incorporate regular fun spending into their budget. I want them to incorporate that because even if they don’t spend that fun money that month, what’s going to happen is when they do decide to have a splurge, that money is going to be there for them and it’s going to be there without question. That’s the most important part. We want the money to be there without question. And when the money is there for you to actually have fun and to be able to spend, that’s where you don’t have to worry about, am I dipping into my savings to pay for this? Oh, I forgot this other expense that was coming up. So if you are a feast and famine spender, the thing that you need to do is incorporate some fun money into your spending this year and don’t tell yourself that you just don’t spend money because that’s not true.

We need you to go through and think about where are the areas in your life that you actually do spend money, and how do we make sure that you have some fun money to be able to spend when you have those moments where you want to splurge, and we don’t even have to call it a splurge in a negative way. It can be something that is positive and that can feel indulgent for you, while also knowing that you get to hit your other financial goals for this year. So that’s feast and famine spender. Now, I want to talk about the treat yourself enthusiast. So you know who you are, you are my YOLO people. I don’t even know if people still say YOLO, but I’m old enough, that’s the word I know. So you only live once mentality, like that is your mantra. And so you have no problem opening your wallet, you’ll open your wallet without any hesitation and it could be the smallest thing, whether it is a coffee or it is a new TV subscription, or you are going out with your girlfriends like you are okay with spending money.

And you probably find that if you’re in this YOLO enthusiast spending mentality, you probably find yourself recovering from your spending at the end of the month. And that’s oftentimes when you start to look at your numbers and that’s when you reflect on like, oh, I kind of did a little bit too much. I don’t need to go outside anymore. Let me stay inside this next month. And so that’s how you reflect on your spending as we think about it from month to month. But in the day-to-day nature of your spending, your spending style is to open up your wallet. And so if you have the YOLO mentality, the reason or how fake math shows up in your budget is you give yourself like, it’s just a little. And so you underestimate your little purchases because sometimes your little purchase is a coffee, sometimes your little purchase is saying yes to another subscription or your little purchase could be having a great weekend with your friends.

There are a lot of little things that you say yes to, but when we go up and add the little things, they have a really big impact on your overall cash flow. They have a big impact on you being able to save money consistently. They probably have an impact on you being able to pay down debt. So if you are my treat yourself enthusiast, my YOLO lifestyle person, the thing that I want you to work on this year and being able to address the fake math that’s in your budget is I want you to, when you’re thinking about your spending, I want you to actually set up some non-negotiables for how you want to spend money this year or how you want to manage your money this year. A lot of my clients that have this YOLO lifestyle, we look at some savings goals, generally speaking and we start to talk about like, what’s a habit you want to build around savings and how do we make sure that we can put something in place, even if it’s a hundred dollars that you’re saving every time you get paid, that we make that a non-negotiable for you so that as we’re coming back weekly to money dates and we’re thinking about what’s happening with our money, that we also know that we are protecting this other goal that you have. 

So we’re shifting you from just being a spender to also thinking about like, how do you want to be someone who is intentional with their spending so that you can also be really intentional about setting and creating other financial goals for yourself. So that’s that spender. The third spender would be my frugal hoarder, cheap Kathy. Cheap Kathy is not opening their wallet. Cheap Kathy is telling you about the sales that they’re getting. They’re telling you about how they’ve been wearing the same set of shoes, they’re telling you about, they have one investment piece that they will wear over and over and over again, but they don’t spend money.

And oftentimes I think that people that have this mentality, they could have also seen in their life where someone maybe blew a lot of money and they don’t ever want to be in that situation, or someone told them it’s really important to save money. And so they took that lesson and they took it to heart. So when we look at our cheap Kathy, this frugal hoarder, they actually need to incorporate spending. So if you fit into this bucket where you’re like, Keina, I am a cheap Kathy, I don’t spend money, “I only spend money on essentials and the things that I’m supposed to spend on,” and I’m saying that with some legit air quotes. I want you to spend money this year because fake math may not show up in your budget in the sense of not having money saved, or it may not even show up in matter of like you being in debt, but you are missing opportunities to actually invest in yourself and to probably explore and have fun.

And what I want you to do, is I want you to give yourself permission to spend. One of my clients, Amy, I remember we worked together and she was really, really good at saving money, but one of the things she also got really, really good at was being able to say yes to investing in herself. And so being able to create a joy fund where you are spending money, if you, I can’t remember, I may have this story wrong, but I feel like she took a sewing class. So that was something we talked about. So if you are someone who is a frugal hoarder, like I want you to find opportunities that you want to invest in for yourself that may feel selfish, that may feel overly indulgent. Maybe it’s getting your house clean, maybe it’s getting a massage, maybe it’s signing up for a new yoga class. Maybe it’s investing in a hobby that you’ve always wanted to invest in. 

But I want you to build a joy fund in your spending plan this year, and I want you to incorporate spending money on yourself because there are other opportunities that are going to come from you giving yourself permission to spend. If you’re spending money for someone to come and clean your house, you’re going to get hours back in your life that allow you to nurture relationships, that could allow you to develop a business idea that maybe you’ve been sitting on. And so fake math is showing up for you because you are missing out on opportunities to actually invest in things that could support you in growth in your life. So you are probably so numbers focused that you are missing out on opportunities to expand and allow your life to actually blossom.

So the four spending profile is what I’m going to call the millionaire in the making. And my millionaires in the making are doing the right things with their money, if you will. But I think where my millionaires in the making is, they’re really optimistic about how money moves in their life. Generally, they make really good money. They have the ability to make money quickly. It could be that they’re making money in a business. It could be that they have a side hustle or they always get bonuses in their nine to five. And so because of the fact that they always have money coming in, there’s always a door open for them to spend money. So they allow themselves to spend freely because they feel like there’s a waterfall of money always coming in. 

And how fake math shows up for them is they don’t feel like they need to plan for things because they always are going to have money coming in. They will talk about with this next bonus or with this next sale, with this next check, they will talk about what they’re going to do with their money. And so within their budget, there’s not the opportunity to think about future planning. They’re only thinking about the next check that’s coming in, and it can be detrimental because they haven’t actually thought about how they can take care of themselves. If that next check or that next sale doesn’t happen, what would happen to their lifestyle? So they’re generally optimistic, especially when it comes to money. I would say their money mindset is healthy in the sense that like they believe in their ability to make money, but one of the errors in their money mindset is that they are not thinking about how to develop and have their own safety net.

And so what I want this vendor to be focused on in the new year is building their own safety net that doesn’t actually focus on future money. So how are you as a millionaire in the making, making sure that you’ve created your own safety net? How are you making sure that you’re contributing to your retirement? How are you making sure that you have an emergency fund or rainy day fund so that if something happens, you have your own back and it’s not dependent on a piece of paper. And by a piece of paper, I mean a paycheck coming to you, an invoice coming to you, a contract coming to you. I want you to know that you have your own back financially. So when we’re thinking about your numbers for this year, we want to make sure that you are incorporating, actually creating like a millionaire fund that you can actually see when you open up your bank accounts, where is that money to make sure that you can take care of yourself and it’s not dependent on a paycheck coming in.

So within any one of these four profiles, wherever you may fall, and maybe you have some overlap in between the four, there’s a couple questions that I want you to ask yourself as you think about this new year and think about how you want to reshape yourself as a spender. I want you to ask yourself like, am I estimating instead of using real math when it comes to my numbers? And I want you to answer the question of like, why are you estimating instead of using real numbers, if you notice that you answer yourself with like, oh, well, that subscription really doesn’t matter, like it’s just $7, or, oh, I can just figure that out later. Like when it comes up, that is a clear telltale sign that you have fake math going on because you are thinking that there are little and simple expenses that don’t matter.

And I don’t want you to hear this as like you need to be really nitpicky about $2 and 99 cents. But oftentimes, if you are willing to overlook something that is $7 and 50 cents, when we look at your account, there are other things that you’re overlooking as well when it comes to your finances. I can say this like without a doubt, I look at clients’ finances all the time where there might be a $2.99 expense, and we’re not looking for the $2.99 expense. We’re looking at the patterns. We’re looking at how is money moving in and out in ways that you may not have noticed. So that’s why you want to be really mindful of where you allow yourself to estimate instead of using real math. And your real math is there to give you an overall picture and to let you know, okay, here are the lines that I need to stay within and here’s like the outline for how my money is being spent.

And it doesn’t mean that you can’t spend money in other ways, but we want you to have a clear picture of how you’re actually spending money this year. We don’t want estimates. There are more things that you spend money on than just your bills. And we want to get out of the mentality of like, well, my bills are paid, so as long as my bills are paid, the rest of the money is mine, because that’s not true. I want you to be really intentional about how you want to spend the rest that is yours, but also making sure that you’re covering the things that make you roll your eyes. Whether that’s auto maintenance, whether that’s having to pay your Amazon subscription when it comes out, or maybe it’s your property taxes, or it’s your vehicle property taxes if you live in a state where they do that. So we want to make sure that we are planning for those things that sometimes can be a little bit more invisible because they’re not a bill that happens every single month. 

The other things I want you to ask as you are thinking about spending is like, am I ignoring future consequences? And I have just talked about that, where, if you are ignoring a Hulu subscription that’s, $7.14 cents, like what consequences does that have for me when I see something that’s only $10 or it’s only $7 and I’m ignoring it or I don’t want to cancel something because I don’t want to be on the phone with customer service. But just think about the consequences of that in your budget. It could mean an opportunity for you to save money. It could mean, over years and years and years, that’s going to be hundreds of dollars that you’re actually losing, that you could have funneled to some other financial goal that you have for yourself.

And then the last one is, am I justifying purchases emotionally? So as you go through and you develop a budget for this year, you will probably get to a place where you actually are going to have to audit. You’re spending, you’re going to have to ask yourself, are there expenses here that I want to revisit? Are there expenses here that I want to cancel? Are there expenses here that I want to keep? And so something that’s going to come up for you is going to be your attachment to certain things that you realize that you want to part ways with. And so just identifying where are the emotions when it comes to developing a budget? Where are the emotions even when, I’m talking about feast and famine spender. Where is that person’s emotions when they go to splurge on something? And so just also being able to identify, even in those moments where I’m telling myself that it’s okay to splurge on something, let me check in with myself before I actually buy it so I’m not bringing something into my space and into my life that actually doesn’t fit how I want to feel in my home or in my space.

So those are important reflection points for you and not just always giving yourself permission to say yes to that next thing that you’re buying because you deserve it or because you’re an adult or because you make good money. And these are the things that you want to watch out for if you want to ditch fake math in 2025. So thank you so much for listening to this episode, and I hope you took at least one takeaway away for yourself. And if you want to dive deeper into fake math and your spending profile, I would definitely encourage you to apply to work with me in my five month coaching partnership. So you can go to my show notes and apply to work with me there, or just go over to my website@wealthovernow.com. Until next week, have a great week.

Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.

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