Broker Check

How much do you spend each month?

| August 26, 2021

Do you know? But do you really know? What's your best guess?

When I ask this question to new clients, I often get interesting reactions. Some people have some idea of what it is, but most people surprisingly don't. There is a specific group that knows their number like the back of their hand. They know it because their livelihood depends on it.

The one's who are in retirement, or are right on the doorstep of retirement.

Think about it. If you're about to retire, you better know how much income you will need to live. Your assets are going to be called upon to start replacing your income for potentially decades. Knowing how much it costs to maintain your lifestyle is critical!

But when I ask people under the age of 55 this question, most have no idea. 

Now, if I asked you to put together a "budget" (I hate budgets by the way), what do you think that number would really be? Do you think it would be higher than what you initially thought?

Here's the reality, and I mean this respectfully of course...

I don't care what you spend each month. 

What I care about is how much you save each month. Saving money can be just as addicting as spending money. We just have to re-program our habits and our way of thinking.

That's easier said than done.

It takes a system. It's like people who try to quit smoking cold turkey. Some are able to do it if they have an event in life big enough that motivates them, but most aren't able to. We have to re-program our habits. It's mainly psychology.

The fact is, it's real easy to figure out how much you spend each month. How much did you make last year? How much did you save? Now how much did you save after you dipped into savings? The rest is what it took to live life. It's pretty simple. So if you make $100,000 per year, and your savings grew from $10,000 to $15,000, you contribute 6% to retirement ($6,000 per year), and you put $4,000 into a Robinhood or Coinbase account, you saved $15,000 last year and spent $85,000 on everything else from taxes to mortgage or rent, to student loans (unless they are federal loans - thank you 0% and $0 payments!), to food, travel, daycare, dining out, etc.

Most people know their expenses are higher than they would like, but the reality is they aren't in enough pain today to do anything about it. They're comfortable. And being comfortable is easy. It doesn't require change, it doesn't require being vulnerable, but it's impossible to get to the next level when you're comfortable

Maybe some in the medical field will say "Well I'm in residency, so I can't save much right now", or "my student loans are so high, so I can't save as much". That may be true to some degree.

But have you really tried to save? What if there were simple strategies that you could implement to help you save? I have multiple clients in residency and clients who pay thousands to student loans and they are still saving (some) money and still living life.

Being comfortable is fine right now because you have income. What happens when you go to retire and you need income, but you don't have enough assets to replace that income?

These are questions to be answering today, not when you are 60 and wanting to retire. The sooner you start creating good habits, and start understanding your cash inflows and outflows, the faster you will get to where you want to go. 

Think about your numbers and let's have a call to discuss everything. Complimentary, this one's on me. No strings attached. 

Schedule a meeting here and we will get a ton accomplished.