Spending is the amount of money that is going out of your account. An expense is anything you spend money on. When attempting to gain financial independence, the primary goal is to spend less than your income. A secondary goal is to continuously look for ways to spend less.

Life is meant to be lived, so it’s not so much about eliminating all expenses but rather prioritizing those that add the most value to your current and future life.

I categorize my expenses into needs, wants, and giving. The wants are where you have the option to really set priorities, although the needs often account for the bulk of your budget via housing, driving, food, debt, and healthcare. Even though they are needs, you do have some level of control over most of these large expenses. Do you really need a 3,000 square foot home and a new car every other year? Can you reduce your grocery bill by bringing lunch or shopping somewhere else?

If you want to know what people value, look at their expenses.

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