You Can Only Spend Each Dollar Once

You Can Only Spend Each Dollar Once

Over the weekend, I sat down to talk a bit about money with our oldest son. He receives a decent monthly allowance; he got some gift money for his birthday back in October, and he also makes money from random jobs like pet sitting, etc. Yet, he was broke… and more importantly, he wasn’t sure how it happened.

Obviously, the root cause was that he had spent all of his money, but he couldn’t figure out how or why it was all gone. The culprit? Mental accounting.

Related: 7 Tools for Tracking Your Money

All too often, people use mental accounting tricks to justify expenditures they really shouldn’t be making. They receive a windfall of some sort and spend it on a night on the town. Then, a few days later, they spend it on a fancy new gadget. And a few days after that, they spend it yet again on another extravagance.

All the while, they’ve been using the same windfall to justify their spending. In essence, they’ve been spending those same dollars over and over. That’s exactly what happened to our son.

He received some cash for his birthday, got his allowance, and made a few bucks taking care of the neighbor’s dogs. Suddenly, he felt flush. So, he downloaded a new video game. He downloaded a movie and a few songs from iTunes. He bought himself a new football jersey. He ordered an Airsoft gun. And suddenly he was broke.

In his mind, he had been justifying all those purchases with the same few dollars. And guess what? You can’t spend your dollars more than once. If you try, you’ll wind up broke — or worse.

So how can you avoid getting into my son’s situation? These tips should help.

Cash is Sometimes Better

Of course, if you’re dealing with cash, you literally can’t spend your dollars more than once. But if you’re using a cash equivalent — such as paying with a credit card, etc. — then it’s easy to lose touch with your spending.

In our son’s case, we were enablers. We covered some of his purchases when he had left his money at home on the promise that he’d pay us back. I paid for his video game download with my PayPal account on the same premise. And so on. He kept spending, secure in the knowledge that he had a ton of money.

Learn More: Cash or Credit — How Should You Pay?

But he didn’t have a ton of money. And by the time he paid us back, he was tapped out, having spent everything that he had taken in recently, as well as all of the spending money that he’d been saving up. Fortunately for him, we settled the bill before he went into debt.

Common Sense or Not, It’s Still A Struggle for Some

The lesson here is that impulse purchases add up. Fast. And it’s incredibly easy to let your spending get the best of you if you’re not keeping close track of things. Making mental notes, especially when you are feeling comfortable thanks to a recent windfall (like a tax return!) can be detrimental to your bank account.

As a general rule, we don’t lend our kids money to buy things they can’t afford, but we also leave it up to them to make their own spending decisions (within reason, of course). The idea here is to let them make mistakes while the stakes are low.

In our son’s case, hopefully he’ll learn from this experience and avoid similar problems in the future. I think, or at least hope, it worked this time around. He was pretty downtrodden when it came time to settle his bill. And when we talked about what had happened, he seemed genuinely chagrined.

Going forward, I’ll make a point of encouraging him to carry and spend his own cash so he’ll have a better feel for what he’s spending. And if you’ve fallen into similar traps in the past, I suggest that you try doing the same.

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7 Responses to “You Can Only Spend Each Dollar Once”


    Perhaps you should arrange for him to set up a savings account and transfer half of all income received directly into the savings account. Hopefully this will start to instill some discipline in him.

  2. Anonymous

    It is so important to teach our kids about money at an early age. If we don’t we can rest assured someone else will (television commercials, magazine ads, etc).

    I recently had the opportunity to teach a personal finance class to a group of 8th graders and I heard a hundred different methodologies concerning how to handle money. Many of which included heavy doses of financing and credit card debt. There were a few who understood a little more than the rest. That was encouraging.

    In the class we had a budgeting activity and I was amazed at how many students decided against saving and giving, by spending all their dollars on clothing and entertainment. I even had one student ask me what charitable giving was!

    Overall, it was an exciting class to teach and I definitely see the need for reinforcement when it comes to teaching our youth about good and bad ways to handle money. I look forward to teaching the class again.

  3. Anonymous

    Great idea on keeping a “cash register” as a kid! It sure is easy to lose count of what monies you really have unless you’re keeping a record. I’m going to give one to each of my kids and see if they’ll agree to try using it. Thanks for the great tip!

  4. Anonymous

    It sounds like you are in almost the same exact I have been in with my three children. We have given them open access to buying things they want, with rare veto privileges (and we sometimes buy them if they don’t have the cash, but we discourage that — I feel that if they count out the cash it hurts worse). Having the kids learn to control their emotions and impulses now will save them untold heartache later – I hope!

    Stick with the plan, it is a good one!

  5. Anonymous

    Hopefully it is lesson learned for your son! Have you thought about him keeping a “register” of his cash? Similar to how you would for a checking account, keeping a register of what cash he has might be a good way to keep track of his spending. It’s also a good way to teach him how to balance a checkbook, which seems to be a lost art!

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