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Personal PlanningWhere Did My Money Go?


This article was reviewed by Chris Singer, CFP®.

The Latte Factor

No matter how much money one makes you can always find a way to spend it. Does your income keep going up but yet there is no extra money at the end of the month? Do you know where your money has gone? What happens in retirement once your income is fixed?

The “Latte Factor” is when you have missing money each month and you have no idea where it went. You may not even know how much was spent. Each person typically has a latte factor, the question is how big is it?

Budgets are typically greeted with mixed emotions; I would propose that we should embrace this fantastic tool and use it to its fullest. If used properly it should give you control over where your money is allocated. Not sold yet? Okay, at least humour me and read the rest of the article.


Do you use one? A budget is simply a tool to make decisions about what your priorities are. Typically the more money you spend in a category the more important it is to you. If you don’t use a budget, start by creating one; don’t worry about getting it perfect as you will adjust it as you go. The big mistake is that most people stop at this point. The next step is to track it!

Track It

Do you track your budget? Some people take the time to create a budget but I would venture to guess that very few track it. Yet this is the key to good money management. How else do you know what you are really spending? Did you stick to your budget? Was it realistic? When you create next year’s budget should it be adjusted?

Fixed vs Variable

There are two types of expenses; the first one being fixed. Fixed expenses are things like your mortgage, property taxes, phone, utilities, etc. These expenses may change over time but usually they stay fairly level. Variable costs, on the other hand, can change weekly or monthly depending on spending habits or circumstances. These are things such as restaurants, gifts, clothing, vacations, etc. The expenses to track and watch on regular basis are the variable ones.

Know Your Tendencies

Every person has their own spending habits, these are the hidden areas that eat up a lot of our incomes. Based on the many budgets that we have reviewed with clients, here are the top areas that are usually missed or underestimated.

  1. Entertainment – Restaurants, movies, sports, golf, music, concerts, hobbies, crafts. It’s easy to say let’s go out for dinner. For our family it is easily $80 to go out. That can add up quickly if not watched.
  2. Vacation – Who doesn’t like to get away? Most budgets we see do not have the proper amounts budgeted for what people have planned. How many trips annually? What destinations?
  3. Home Improvements – Have you ever planned a renovation to your house that slowly expanded and got bigger and bigger?
  4. Clothes – Depending on the clothes you need for work or the taste that you or your family has, this expense can vary quite a bit.
  5. Groceries – Do you know what you spend in this category? You might be surprised at how much you are actually spending on food every month.
  6. Gifts – Weddings, anniversaries, birthdays, special occasions. The list can keep going; whether it is the endless children’s birthday invites or the special family occasions, they all add up. This category alone can cause major hidden damage to a budget.
  7. Children – According to, the average cost of raising a child to age 18 is $243,660. That’s not including expenses after age 18 like weddings, university, or the fact that maybe they still live at home. (

Using a budget to help manage your finances is imperative to good money management at any phase of life. If you would like more information or have questions please feel free to contact us.