Being Broke, but Spending like You're Rich

I recently had an experience at work that got me thinking about the relationship between wealth and wastefulness.

I was working with someone who earns a little bit over minimum wage. They don't have much money saved and, by their own circumstances, aren't financially comfortable.

They had takeout for lunch. They had leftovers, but instead of taking them home, they threw them away.

When I asked why, the answer was essentially:

“I don't like left overs.”

That got me thinking.

Because on the surface, this looks like a small decision. Maybe $10 or $15 worth of food. Who cares?

But that's exactly the problem.

They don't have money to burn, so why are they so frivolous with it?

Small Decisions Don't Feel Expensive

At $21 an hour, $15 isn't nothing.

And it's important to remember that $21 an hour is before taxes.

If you want to have $15 of spending money in your pocket, you have to earn considerably more than $15 to get there. Depending on your tax situation, you might need to earn around $20 in gross wages to end up with that $15 after tax.

So throwing away $15 of food isn't really throwing away 43 minutes of your working life.

It's closer to throwing away about an hour of the work required to earn that money in the first place.

And that's where personal finance gets interesting.

We tend to think about money in dollars.

But money is actually stored time and effort.

You worked for that $15.

You traded part of your life for it.

Once you start looking at spending through that lens, wasting money becomes a little harder to dismiss.

Broke ≠ Frugal

Here's what really struck me:

Being poor doesn't automatically make someone frugal.

We often assume that people with less money will naturally be more careful with it.

But that's not necessarily true.

Someone can have very little money and still make decisions that would make a wealthy person seem wasteful.

They might:

• Throw away perfectly good food.
• Pay for convenience repeatedly.
• Buy things they don't really need.
• Ignore small recurring expenses.
• Pay extra for delivery.
• Replace things rather than repair them.
• Make impulse purchases because “it's only $10.”
• Spend money today without considering what that money could do tomorrow.

None of these decisions necessarily looks catastrophic.

That's what makes them dangerous.

It's the accumulation of small decisions that matters.

Being broke and being frugal are not opposites.

You can be broke and wasteful.

You can be broke and extremely disciplined.

And you can be wealthy and either one.

Your income doesn't automatically determine your financial behavior.

“It's Only $10” 

Imagine someone says:

“It's only $10.”

They're right.

$10 isn't going to change their life.

But suppose they say that twenty times a month.

Now it's $200.

That's $2,400 a year.

At $21 an hour, that's more than 114 hours of gross wages.

Suddenly “only $10” looks different.

This is one of the most important lessons I've learned about personal finance:

The problem usually isn't one bad financial decision. It's a pattern of decisions that are individually insignificant but Collectively Expensive.

The Mindset Behind Waste

The interesting thing about the takeout wasn't the food.

It was the mindset behind the decision.

The person had already decided that the food wasn't worth eating the next day.

And psychologically, that makes sense.

Once you've eaten your meal, the remaining food can feel like something you don't want rather than something you paid for.

You don't think:

“I'm throwing away $15.”

You think:

“I'm throwing away food I don't want.”

That's an important distinction.

The original purchase price has already been mentally spent.

But the money is still gone.

And the food still has value.

The question isn't whether you enjoyed the food yesterday.

The question is:

Is the remaining food worth more to me than the alternatives available to me?

If the answer is yes, keeping it makes sense.

Sharing to Save

What made this particular situation even more interesting was that another coworker had ordered the same meal.

There was an obvious opportunity to share.

Instead of two people buying two meals and potentially throwing away part of both, they could have shared one.

That's a simple example of something I think is missing from a lot of personal finance advice:

Wealth isn't just about earning more. It's about getting more value from the resources you already have.

You don't necessarily need another $100 of income.

Sometimes you need to stop wasting the $100 you already have.

Income and Wealth aren't the same thing

This is where I think people get confused.

Someone can have a high income and be financially broke.

Someone can have a modest income and build wealth.

Income is what comes in.

Wealth is what you keep.

And the gap between those two things is largely determined by behavior.

A person earning $100,000 who spends $105,000 every year isn't becoming wealthy.

A person earning $50,000 who consistently spends $40,000 and invests the difference is moving in the opposite direction.

The income difference is obvious.

The wealth difference is not.

Wealth can make waste easier—but poverty doesn't prevent it

There is an interesting relationship between wealth and waste.

When people have plenty of money, the financial consequences of wasting something become smaller.

If you're financially secure, throwing away $15 of food might genuinely be irrelevant to you.

The cost of saving it, storing it, reheating it and remembering to eat it might be greater than the value you place on the food.

That's understandable.

But something very different can happen with people who don't have much money.

They can adopt the behavior of someone for whom money doesn't matter, even though they don't actually have the resources to support it.

That's where things get dangerous.

You can spend like you're rich without ever becoming rich.

The Real Enemy Isn't Spending

I don't think the lesson is that you should never spend money.

Quite the opposite.

Money exists to provide value.

If spending $15 to enjoy a meal makes you happy, that's fine.

If you genuinely hate leftovers, maybe throwing them away is worth it to you.

Personal finance isn't about squeezing every possible cent out of every transaction.

The real issue is Unconscious Spending.

There's a huge difference between:

“I know I'm wasting $15, but I'd rather waste it than eat leftovers.”

and:

“It's only $15.”

The first is a conscious choice.

The second is a habit.

And habits are expensive.

Think About Money in Hours, Not Dollars

One of the simplest ways to change your relationship with money is to occasionally translate purchases into working time.

If you make $21 an hour:

• $5 = about 14 minutes of gross work
• $10 = about 29 minutes
• $20 = about 57 minutes
• $50 = about 2 hours 23 minutes
• $100 = about 4 hours 46 minutes

Suddenly that $100 purchase isn't just “$100.”

It's almost five hours of your life before tax. Not to mention all your fixed bills that you have to pay just to exist. 

That's not an argument against spending.

It's an argument for spending consciously.

If something is worth five hours of your life, buy it.

If it isn't, don't.

Frugality Isn't About Being Cheap

There's another important distinction here.

Being frugal doesn't mean refusing to spend money.

It means getting the maximum value from the money you do spend.

A frugal person might happily spend $200 on something they truly value.

They might also refuse to spend $5 on something they don't.

That's very different from simply being cheap.

The goal isn't:

“Spend as little as possible.”

The goal is:

“Waste as little as possible.”

And that applies to more than money.

Don't waste food.

Don't waste time.

Don't waste resources.

Don't waste opportunities.

And don't waste money simply because the individual amount feels too small to matter.

If you found this helpful and would like help budgeting or investing please email me at BudgettoWealthTM@gmail.com 

And sometimes that means something as simple as taking the leftovers home.