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How to know how much you spend Thumbnail

How to know how much you spend

I am Steve Wershing from Focused Wealth Advisors. You know it's not how much you make but how much you keep that determines how successful you will be financially, but how do you know how much you get to keep? That is dependent on how much you spend and so part of being in total control of your finances in 30 minutes a month or less involves knowing how much you spend. Now if you have an application like a Quicken or something from your bank that downloads all the transactions and automatically stays updated, it becomes a lot easier. 

But what if you don't? How do you get an idea of how much you spend? Well you might be tempted to write down all of your bills and try to recall all the different transactions that you had over the course of a month. Don't do that! Who needs that kind of work? 

There is a foolproof way to know exactly how much you spend over the course of the year and here's how to do it. You will need a couple of documents - you will need last year's tax return. You will need the bank statements from the end of last year and the end of the prior year, and you will need last year’s investment account statements That will be your 401(k), your brokerage account, any other kind of investment statements that you have. 

Here's what you do: first take a look at your tax return. Look at line 7B - that is your total income. Next take last year's bank balance and subtract the prior year's bank balance, that will tell you how much you have accumulated in your bank account over the course of the year. Then take a look at all of your investment statements and add total contributions. Don’t compare the balances because they will be influenced by movements in the market. 

Add the total contributions to however much your bank balance went up over the course of the next year. That is your total savings. Subtract the total savings from line 7B your total income. That is how much you spent over the course of the year. 

That way you can know exactly how much you spend and based on that we can start making some decisions about whether or not that's too much whether that's in line, but all of that starts with knowing exactly how much you spent. That's one of the principles of Field of Vision Planning - knowing where you stand knowing what you made and how much goes back out of the house. 

If you would like a document with 10 principles on how to optimize today which includes some of the other ideas on how to make the most of your financial future. Just go to our website. https://Focusedwealthadvisors.com/10-tips and you can download a copy of those 10 principles right away.