How Much Did I Spend Last Year?
One of the key items to determine when getting ready to retire is to know how much you spend each year, to be able to compare it to what your spendable income is projected to be once you are retired. Or maybe you are just trying to determine your budget to be able to make a large purchase. Here is an easy way to come up with the number. This assumes that you have one checking account that is used to pay all bills, housing, credit cards, etc. If you pay cash for items, you will have an extra step. If you have more than one checking account, repeat the exercise for each account.
Step 1 – Determine the period you wish to calculate. For example, January 1 – December 31.
Step 2 – Take your account balance at the end and subtract it from the beginning figure. Do not worry if this is a negative number.
Step 3 – Add up all your deposits to the account for the year. Then add the number from Step 2 (or subtract it if it is a negative number). This is your spending figure!
Step 4 – If you use cash to spend, here is the extra step (ignore this if your cash comes from an ATM)- calculate how much cash you received during the period and compare it to the cash you have on hand. Add it to Step 3 for the total amount.
Knowing how much you spend is key to creating and keeping an accurate budget and keeping you on the road to financial success!