Do 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 “no way”! 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.
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, I would collect all of our client’s financial information and build an investment plan around their financial goals.
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’t get the math to add up. [Read more…]