{"id":12666,"date":"2016-04-27T07:15:23","date_gmt":"2016-04-27T11:15:23","guid":{"rendered":"http:\/\/www.moneysmartguides.com\/?p=12666"},"modified":"2020-11-19T12:53:27","modified_gmt":"2020-11-19T17:53:27","slug":"real-amount-spending-each-year","status":"publish","type":"post","link":"https:\/\/www.moneysmartguides.com\/real-amount-spending-each-year","title":{"rendered":"The Real Amount You Are Spending Each Year"},"content":{"rendered":"

\"spendingDo you know how much money you are spending each year? Do you want to know the answer to this question? For some of you, the answer might be \u201cno way\u201d! But knowing how much you spend can really be an eye opener. In fact, it might just be the kick in the pants you need to actually start saving and improve your finances. It may also shine some light on some bad spending habits you have.<\/p>\n

We all have an idea in our head regarding how much we are spending each year. The problem is that we are usually wrong. In fact, we typically underestimate how much we spend. For example, when I worked for a high net worth financial planning firm<\/a>, I would collect all of our client\u2019s financial information and build an investment plan around their financial goals.<\/p>\n

As part of constructing this plan, we needed to know how much they spent. When we would ask them, they would throw out a number. Usually it was pretty low. When I then started working on putting the plan together, I couldn\u2019t get the math to add up.<\/p>\n

I would usually give them a call and we would run through a basic budget<\/a> I created so I could get a better sense of what they were spending. When I did this, their true spending number would reveal itself and it was always higher than their estimate \u2013 many times much higher. (In the times when they didn\u2019t want to talk to me about their spending, I would have them send me their bank statements so I could get an idea of their real spending.)<\/p>\n

Unfortunately, I can\u2019t give each of you a phone call to run through a basic budget to get a rough idea of what you are spending each year. But I have a little math formula that we can use instead.<\/p>\n

By the time we are done doing the math, you will get a better idea of just how much money you spent last year. You can use this as a guide to how much you are spending each year since in most cases, it is an accurate representation of your income and expenses.<\/p>\n

All you need is your tax return, the tax tables, a pen, paper, a calculator and 15 minutes. Trust me, the math is basic. Do you dare find out how much you spent last year?<\/p>\n

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