When I talk to investors, I usually start with a simple question: How much do you spend each month? The answer always comes quickly and confidently: “Oh, I have it all right.” But when I ask about the price, many people hesitate. It’s like that driver who insists on knowing how much gasoline is left in the tank, until the car stops in the middle of the road. In personal budgeting, the feeling of control is also illusory: we think we know where the money is going, until it disappears before the end of the month.
The illusion of financial control is a common phenomenon. Small, everyday expenses seem innocuous — the coffee at the bakery, the transit app, the forgotten streaming subscription, the bix at lunch. None of these expenses alone matter. But together they work silently to create a gap through which a large portion of the budget escapes. According to a survey conducted by Datafolha for Planejar (Brazilian Financial Planning Association), 52% of Brazilians say they have a good idea of their monthly expenses, but they do not know exactly how much they are spending.
The problem is exacerbated with digital money. Before, opening your wallet and seeing bills disappear or noting expenses on the stub of your checkbook caused discomfort; Today, one click is enough to spend. The pain of paying, as behavioral economists call it, has become a numbness.
Nobel laureate Richard Thaler showed that we create “mental accounts” — one for entertainment, one for food, one for unexpected events — and we end up spending more than we imagine on each one. The brain makes the mistake of thinking that a small value is irrelevant, ignoring the cumulative effect.
Let’s take an ordinary example of daily spending: coffee and bread on a plate at the bakery (R$15) and an afternoon snack (R$15). Added together it amounts to R$900 per month. Aggregated over 40 years at a real interest of 6% per annum, it results in assets worth R$1.79 million in today’s values. This amount is sufficient to provide an income of R$ 10.75 thousand per month, adjusted for inflation, for 30 years. The difference between those who implement their plans and those who postpone their plans is rarely in income, but in awareness of expenses.
Thales of Miletus said: “There is nothing more difficult than knowing yourself.” The same goes for your own pocket. It’s easy to see how much you’re earning; Knowing how much to spend requires self-knowledge, discipline, and the humility to face the numbers. Control is not about remembering in your head, it is about measuring and adjusting.
Writing down all your expenses on a daily basis is actually very difficult. Most people don’t have the discipline to do this, and that’s okay. There’s a simpler way to keep track: checking how much you’ve saved. From this number, the real consumption can be estimated. So ask yourself: How much have I been able to save each month? If the answer is “nothing” or “less than I want,” the problem has already been detected.
As long as controlling your money is just a buzz, financial freedom will remain just an intention.
Michael Viriato He is an investment advisor and co-founder of a company Investor House.
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