On Monday we covered the
So of course naturally we have to talk about those today 😉
And according to Nik Halik, the person behind this press release and the co-author of “
“We’re taught to believe that expenses are bad and to cut them as much as possible, but that perspective is simplistic and misguided. In reality, there are four types of expenses, and only one of them needs to be cut.”
Here are the four types he lists:
#1. Lifestyle (Consumptive) Expenses
These expenses include eating out, vacations, concerts, entertainment, road trips – pretty much any “experiences” that help you build memories and which usually involve other people. All completely fine according to Halik, so long as you do it in moderation, of course.
#2. Protective Expenses
These are the costs associated with protecting the important things in your life like your health, house, cars, businesses, etc. Which includes all the insurances you take on (auto, life, health, disability), as well as even Emergency Fund savings to protect you from having to go into debt. Also an OK bucket of expenses, and which Halik says the wealthy are actually much better about prioritizing than the middle class – probably because they have more to protect? (Or can afford to easier?)
#3. Productive Expenses
These are the things that improve your life, especially for the long term. Such as investing in your education or career, scooping up investments (real estate, stocks, bonds, etc), starting up or marketing your own business, and essentially anything else that fall under the whole “you gotta spend money to make money” adage. Another area that’s fine for spending.
So what’s this naughty expense, then???
#4. Destructive Expenses! (Dun Dun Duuuuuun…)
These are the bad boys of the group, and include all your nasty habits/vices and nonsense fees you pay, credit card debts, memberships you never use, and anything else that takes away your hard earned money without giving anything back in return. The toxic expenses, if you will. And they’re everywhere!!
I haven’t fully thought through all these expenses yet (literally just got the email an hour ago, haha…), but so far I’m digging it… You normally think of ALL expenses of being bad, so it’s a refreshing take (and reminder!) that sometimes it IS perfectly fine to spend money instead of banking it 24/7…
And in fact, I can come up with a handful of examples for each section, can you?
Lifestyle expenses — boys weekends in
Protection expenses — our life insurance, health insurance, renter’s insurance, car insurance, overloaded cash reserves, umbrella insurance, soon to come revised (and legit) will and testament/trust to finally get knocked out once and for all! (my trouble spot), and then all the maintenance we do for our cars or homes over the years… Pretty much making this category the LEAST fun of the group 😉 At least with the destructive expenses you get an initial thrill!!
Productive expenses — books!!!, index funds, coin club memberships,
Destructive expenses — traffic tickets, overpriced cable bills/cell phone bills, ridiculous investment fees,
Fun exercise to go through – highly recommend it! (Especially if you’re bored at work right now)
I’m not sure where stuff like food and clothing go, or even roofs over our heads (maybe “protective” since you kinda need them to survive?) but an interesting way of looking at it all for sure…
(Now watch – every time you go to buy something you’ll be trying to figure out which category it falls into! HAH!)
If you’re interested in learning more, check out Nik’s new book –>
Now go out and spend some good protective/productive money!
PS: $5.00 if you can name all 5 people in that picture up top, and *where* it was taken 😉
PPS: Links above to book are Amazon links…
[For more $$$ nuggets, head over to