After understanding money and income, the next critical step is to understand where your money goes.
Most financial problems do not come from low income alone — they come from uncontrolled or unconscious spending.
This lesson focuses on building spending awareness, not guilt or restriction.
👈 Who This Lesson Is For
- Beginners learning money basics
- Students and first-time earners
- Anyone who feels money disappears quickly
- People who want better control without stress
What You’ll Learn in This Lesson
By the end of this lesson, you will understand:
- What expenses really are
- The difference between needs and wants
- How lifestyle inflation affects finances
- Why tracking expenses is essential
- How awareness leads to control
What Are Expenses?
Expenses are all the places where your money is spent.
Every rupee you earn will either be:
- Spent
- Saved
- Invested
If you don’t consciously decide, spending happens automatically.
Types of Expenses
1️⃣ Needs
Essential expenses required for daily living:
- Rent or home EMI
- Food and groceries
- Electricity, water, internet bills
- Education and basic healthcare
These expenses are usually non-negotiable.
2️⃣ Wants
Expenses that improve comfort or enjoyment:
- Eating out
- Shopping beyond essentials
- Entertainment subscriptions
- Travel and leisure
Wants are not bad — but they need limits.
3️⃣ Lifestyle Upgrades
Lifestyle upgrades happen when spending increases automatically as income increases.
Examples:
- Costlier phones every year
- Bigger houses without planning
- Frequent online purchases
📌 Key risk: Lifestyle inflation reduces your ability to save and invest.
Why Expense Awareness Matters
Most people don’t overspend intentionally.
They overspend because they don’t track.
Expense awareness helps you:
- Identify money leaks
- Reduce unnecessary spending
- Increase savings without earning more
- Make informed financial decisions
📌 Awareness always comes before control.
Simple Expense Awareness Rule (Beginner Friendly)
Track first. Change later.
For one month:
- Observe where money goes
- Don’t judge or restrict
- Just note expenses
Clarity comes from visibility.
Common Beginner Mistakes
Avoid these:
- Ignoring small expenses (they add up)
- Buying on EMI without knowing total cost
- Emotional or impulse spending
- Confusing wants with needs
What This Lesson Prepares You For
Once you understand expenses, you’ll be ready to:
- Create a realistic budget
- Build an emergency fund
- Decide how much you can save or invest
🧠 Self-Check (Optional – Quiz)
Key Takeaways
- Expenses decide financial outcomes more than income
- Needs and wants must be clearly separated
- Lifestyle inflation is a silent risk
- Tracking expenses creates control
- Awareness is the foundation of budgeting
What’s Next?
In the next lesson, you’ll learn the difference between saving and investing — and why both are necessary.
👉 Go to Lesson 3 – Saving vs Investing
Final Note from Samnidhi Insights
You don’t need to stop enjoying life to manage money well.
You only need clarity, awareness, and consistency.
This lesson is about control — not sacrifice.