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  • Writer's pictureSusan J. Brown

Essential Versus Non Essential Expenses

Updated: Jun 16, 2021

Reviewing Your Spending During a Crisis

If it’s one thing I have heard over and over during the last five months from families, is the fact that they are spending less. Since COVID19 caused the world to shut down families have been staying home more, doing more outside activities and socializing less. Some people are questioning what in the world they were spending money on before as many have seen a reduction in spending by up to 50 percent!

This is of course all related to budgeting and cash flow planning which financial planners love to talk about! I am so interested in it in fact, I made a model to help families use this experience to determine what expenses need to be added back and what ones perhaps do not.

Spending less is one of the four financial foundations to increase your financial success. See our blog article on “Time, Money, Happiness- How to Have it All” for more details on this concept. This certainly however doesn’t mean spending less at the expense of your happiness because after all, “you can’t take it with you”. I have noticed in my over 20 years in financial advising that there is a potential gap in people’s spending versus their values. This promotes wastage and lives little room for savings and offsetting financial risks. This crisis we are going through right now will perhaps help families address that gap and have more discussions around money and family values.

Figure 1

Expense Matrix™

You can see that figure 1 presents an Expense Matrix™ which can be used to have family discussions around spending and to help categorize your expenses.

The two factors I am using are:

· Enjoyment Level

· Required Expense level

The Process

Step 1. Before using this matrix, go through your credit card or bank statements and list out all the expenses you had prior to COVID19. One person will likely have to take the lead on this as it can be an onerous process.

Step 2: Gather with your family to place each expense in one of the four boxes shown. Some discussion will need to be had regarding what is required and not required but we think this adds value to the process!

Step 3: Ask yourself and your family these five questions:

· Have we been happy living on less money?

· What have we been doing less of?

· What have we been saving money on?

· What have we been doing more of?

· What expenses do we want to bring back and which ones do we not?

Breakdown of The Model

If your expenses end up in Box 1, 2 or 3, then these are considered essential expenses and likely cannot be reduced once the pandemic is over. One of the key tenants of this model as you will notice, is that we do consider certain lifestyle items to be essential expenses. Enjoyment in our everyday lives is considered a priority in our view and thus we call these our Basic Lifestyle expenses. If you find that these expenses however are eating up a large portion of your cash flow, then we suggest you prioritize these items and pick the top three family lifestyle activities for each family member. See our blog article on Real Life Cash Flow Planning™ for more detail on budgeting and cash flow planning.

"I have noticed in my over 20 years in financial advising that there is a potential gap in people’s spending versus their values."


Over the last five months, there is likely to have been a shift in values or family patterns. If you find yourself feeling uneasy over how much you are spending or worried about saving for your future, take this opportunity to refocus on what really matters. The goal is to start enjoying life more today while still saving for the future!


Susan Brown CLU®, FEA, CFP®, RRC®, CIM®

Investment Advisor

IA Private Wealth ǀ Propel Financial Life Management

Insurance Advisor ǀ Propel Insurance and Advisory Inc.

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