Financial Word of the Day: Expense

If you want to build wealth, you need to understand one simple truth: Revenue gets attention. Assets get applause. But expenses quietly determine your future.

Let’s define the term clearly.

What Is an Expense?

An expense is money you spend to operate your life or your business.

It’s the outflow. The cost. The price you pay to live, work, and function.

On a personal level, expenses include things like:

• Mortgage or rent

• Utilities

• Groceries

• Insurance

• Gas

• Subscriptions

• Eating out

In business, expenses include:

• Payroll

• Rent

• Marketing

• Equipment

• Software

• Taxes

If revenue is the fuel coming in, expenses are the fuel being burned.

And here’s the key: Not all expenses are bad. But all expenses matter.

The Two Types of Expenses

If you want to be financially savvy, you need to mentally separate expenses into two categories:

1. Lifestyle Expenses: These are costs that maintain your current standard of living. They keep life comfortable — but they don’t generate income.

Examples:

• A nicer car

• A bigger house

• Dining out frequently

• Streaming subscriptions

There’s nothing wrong with these. Just understand what they are.

2. Growth Expenses: These are costs that have the potential to increase your income, skills, or assets.

Examples:

• A course that increases your earning ability

• Marketing for a side business

• Tools that improve productivity

• Investment property repairs

Here’s where most people get stuck: They aggressively cut growth expenses… while protecting lifestyle expenses.

That’s backward.

How the Word “Expense” Shows Up in Real Life

Here’s a conversation you might hear: “We can’t afford that course right now.”“Why?”“It’s an expense.”

That’s technically true. But the smarter question is: Is it a lifestyle expense — or a growth expense?

An expense that increases your earning power isn’t just money going out. It may be money planting seeds.

Meanwhile, a $900 car payment is also an expense — but it doesn’t grow anything except depreciation. See the difference?

Why This Word Matters

Most people focus only on increasing income. That’s important. But wealth is built in the gap between income and expenses.

You can make $300,000 a year and still be broke if expenses rise to meet income. Or you can make $75,000 and steadily build assets if you control and direct expenses wisely.

Financial maturity isn’t about eliminating expenses. It’s about controlling them with intention.

A Smarter Way to Think About Expenses

Instead of asking: “How do I cut everything?” Start asking: “Which expenses are building my future — and which are just maintaining my present?”

That one shift changes everything. Because in the end, expenses aren’t the enemy. Unexamined expenses are. And once you learn to tell the difference… you stop reacting to money. You start directing it.