Do you calculate your monthly expenses?

[angie_nrs]

OK - I gotta admit, I do keep an annual personal asset sheet (that I was urged to do from a fairly young age), for my own information, but I don't typically keep an annual expenses sheet. The asset sheet is easy....just take the year end figures on statements (and such) and plug them into a spreadsheet. However, I found that I really can't truly gauge my true financial situation without having both income and expense figures. My philosophy has always been, if I don't have the cash for it, then I can't afford it, and I don't purchase it. With that philosophy (and the blessing of being healthy and fortunate), it has kept me from spending money I don't have, so there was never any need for an expense sheet.

However, as I get closer to retirement, I can see the value of having both figures. Today I sat down and tried to figure out what we currently spend in a year. I'm finding it's difficult, since we use cash quite often. I'm pretty much left with what I can track in the checkbook and CC's. I know some of our expenses will drop upon retirement and others will increase. So, having a baseline of expenses will be beneficial and I really should try and do this every year to get a better gauge of where I stand on what I spend.

Here's a list of what I've come up with:

Utilities
Credit Cards (includes both wants/needs/entertainment/unnecessary splurges)
Property Taxes
Phone/TV/internet
Life ins.
Car/home/disability ins.
Health ins - don't pay now, but will in retirement
LTC ins - don't currently have, but will in retirement
Pet expenses - vet bills/food/boarding/meds
Any loans (including mortgage & interest) if applicable

It's those expenses that aren't regular that are throwing me off like house repairs, medical/dental OOP expenses, vacations, unexpected vehicle expenses, etc. Those can be BIG ticket items that make a huge difference in any budget. For example, we had to replace our furnace last year......thousands of dollars, but should be good to go for 20 more years.

In addition, it's tough to determine food/clothes/gifts/gas/household items/splurges, etc. b/c those are usually paid by CC or in cash. I would imagine those expenses will vary greatly from year to year. I also have a tendency to buy in bulk on all items, so that's an issue as well. I might have a big expense one year and nothing for several years afterward.

I have learned one thing for sure in doing this.....It's much easier determining your actual income than it is to determine your actual expenses! I'm very fortunate that it's not an issue for me so I doubt I'll keep close track of my cash payments (like I probably should).....but from now on, I will be keeping track annually of both personal worth and also personal annual expenses (within reason). It is apparent that keeping the expense number (as close as possible) from year to year will be a valuable number to have for future reference. It's kinda hard to determine when I can actually comfortably retire without knowing how much I spend at present.

The big unknowns that I am facing are health insurance/med expenses and whether or not SS is going to be there for me (which I have not planned on receiving). LTC is also a concern as that insurance is more expensive the older one gets.

For those who have retired, have you done this exercise? If so, what errors did you make that you wish you wouldn't have made? Any advice for someone looking to retire? I can't wait to read the discussion on this thread!

 

[TMT Tactical]

We track every dime we spend. we use debit and cash, no credit cards. The way we track is through store receipts. checking account statements and out on line statements. we use a spreadsheet to record all purchases . We can track out expenses by monthly average, seasonal average and yearly average. We know what to budget for utilities for any given month. We know what our average food bill will be or how much we budgeted for eating out. This does not mean we are broke or destitute, it simply lets us know how we are doing and what extras we should have available each month.

 

[Amish Heart]

We track on spreadsheet when bills are due. Especially the monthly same old ones. I stick to a household budget (weekly) and use cash. When the money is gone, it's gone. It could be for grocery specials (that's all I buy), or for anything. Or maybe I save some aside for bigger purchases. Right now, I'm setting some aside for stock tanks, those big metal ones to grow veg in. I'm tired of being on my knees, and I'm tired of digging out tree roots from my raised beds. So I turned over our raised beds to our son and his girlfriend, and they'll be growing in there this year. With my husband coming up on a shortened workweek (by choice) in 2 months, and that means a smaller paycheck, he's getting a little nervous. He doesn't want to retire yet because of the unknown health care costs, and his costs are substantial. We did just go through signing my mom up for a medicare supplement, and a prescription coverage and finding a medicare doctor for her when we moved her to Kansas recently. We had no idea how to go about all of that, but learned alot in the process and she ended up getting a good rx and supplement plan.

 

[SheepDog]

I keep track of the monthly expenses but trying to budget them out for prediction is impossible. Some months the food bills only reach a couple hundred dollars and other months it can be almost a thousand. Vehicle expenses are not a monthly thing except gas and that is less than $100 for all three cars. Over the last 5 years I have replaced two starters, a radiator and a heater core. The utility bills are never the same but average around $100 each per month. The kids birthdays and holiday expenses are without exception the big expenses. 5 kids, 12 grand kids and 1 great grandson so with birthdays, Christmas, thanksgiving and valentines day we get to mail gifts all over the USA. I let my wife know that I am saving for two very large purchases and she thinks that means she get to spend more, not less. We are going to set up a special savings account so she understands what she is spending. I am not sure how well that will work. It is easier to tell her how much she is spending and remind her of our monthly income.
I can tell you that food and gas are on the increase and fish prices are way too high!

 

[The Lazy L]

Wrote a check for everything except small out of the pocket items that were paid with cash. More for tax purposes then anything else. A glance at the balanced checkbook and the savings account tells me how much "cash" I have. Checkbook registry I kept on a computer along with the software to print the checks. Computer is old and so is the check writing/registry program. Bought a new computer and now how do I balance the check book?

Oldest daughter told me to use a credit card that has rewards for ALL purchases. Mint.com APP on her smart phone lets her see all of her accounts. Her fights and hotels were paid from the CC rewards. She pays her CC balance off every month. And if there is a fraudulent purchase it's the CC responsibility. "No need to balance a check book Dad!" So for the last two months I've been using #1 Daughter's method of keeping track of expenses and receipts. Once a month I write a check to pay of the CC.

 

[angie_nrs]

Well Lazy L, I still balance my checkbook the old fashioned way. When my statement comes in the mail, I grab my bank bag (that contains my bank receipts), a pen, a calculator, and my checkbook and make sure my numbers (or their numbers) are correct. At work, I do reconciliations on the computer......but not personal. There should be a "reconcile" tab on your book keeping program? What program are you using?

For my CC purchases, I keep all receipts in a bank bag. For online purchases (which is what I mostly use my CC's for) I write down on a scrap piece of paper what I bought, how much it was, and the date. When my CC statement comes I get my bag with all the receipts and make sure all the purchases are legit and I staple it all together and file it away. I don't think most people look very closely at their CC statements and can get easily scammed. I notice Dish Network especially likes to just increase the amount a few dollars here and there without any notice. I notice! QuickBooks/Intuit is also notorious for doing this on the work account. The CC will only be responsible for fraudulent purchases if you notice and report them. For the issues I mentioned earlier (mischievous companies), it's best to call those companies first before calling your CC company.

CC are handy (by design as the banks have so much to gain by CC usage), but for me, I'd rather have the privacy over the reward points. If there was a better option for me to use online instead of CC's I would consider it. Paypal is an option, but I don't want to give them my bank account number so my PP is linked to a CC.

I don't think the younger crowd (Millennials) care much about their spending privacy. It's just not something I've seen any of them care about at all.

 

[Sentry18]

My wife has some kind of software on her laptop that keeps track of every penny, incoming and outgoing. It makes all kinds of fancy graphs and charts, displays and predicts trends and patterns, etc., etc. She can use it tell how much we spent on food 5 years ago and estimate how much we will spend on food 5 years from now. Money is my wife's favorite hobby, she loves to figure out ways to save more money and increase our wealth (current and long term). This is why we don't have cable or satellite TV, had to switch to all long life LED light bulbs and will only by energy star compliant appliances; because she calculates out the long term savings versus the short time benefit. I on the other hand just get my monthly stipend and spend it without any real thought about where or why.

 

[HippoTwilight]

Every penny gets tracked. I use Quicken to track expenses and set the budget. It has a forecasting tool which I use heavily for fixed or recurring expenses. It also has savings goals (virtual accounts) that I use to amortize major and/or infrequent items that are on a somewhat predictable cycle (appliances, car tires and batteries, etc...). Most of those big-ticket items just get lumped together in an emergency fund that's an appropriate size w/o being excessive.

 

[Sewingcreations15]

Have to say we are a bit like @Sentry18 's wife and track all expenses. @angie_nrs I can say I don't think anyone can get a reliable overall view of all expenses unless you track all expenses being cash transactions, credit cards and direct debits.

We are "kind of" retired and I shall explain that DH is on a TPI military compensation payment and I am his fulltime carer for which I get a pension for so neither of us will work again. DH's medical expenses in relation to his military accident are fully funded by the department of Defence and he gets a small allowance for medications and here is Australia we have public hospitals which are free for medical and private hospitals which you pay for. We get bulk billed when we go to the doctor which is free of charge and our prescriptions here on benefits are all $6.30 ea via a script. We can get a months worth of pain medications for DH no matter how many boxes that is for the same price of $6.30. Both DH and I also get free dental through our local hospital in a dental clinic. Our health care system is, may I say it, far better than in the U.S where medical bills can send some and most people broke unless they have health insurance and then still the out of pocket costs are phenomenal.

So onto how we budget we account for every cent as we are saving for a deposit for our home to be built so for us it is a necessity being on a lower income. DH created his own expense spreadsheet on his computer and puts in every expense as it is spent and I also do the same with a manual accounts book and we compare to see if we are both accurate.

Through tracking expenses we set up an accurate budget and have allotted amounts for each category and stick to it and if we go over budget it comes out of the next month's budget. I will say that in regards to utilities that we just add 10% each year to the current expenses to account for price rises and we also adjust our budget when prices rise higher than our current budget we write a new one.

I recommend also to put in a category for machinery car maintenance and even if you don't use it the money will be saved for when you do and or you can have an emergency fund set aside to cover these expenses. We personally do both and have an at home emergency fund and a cash household emergency fund.

We always run under our budget targets that we set so if an emergency does happen there is usually always the money there to cover it too.

Hope this helps.

 

[Homesteader33]

I have a spreadsheet I use to track utilities, debts, farm expenses, savings, insurance and many other things it can spit out graphs to if needed but I am not a fan of graphs...I like numbers.

 

[captain belly]

I'm not close to retirement yet, but I believe the best advice I could give anyone is to follow the teachings of Dave Ramsey (the book "Total Money Makeover". My wife and I followed his advice and not only got out of debt, but now manage what we do have better than ever. A lot of folks think he just teaches about debt, but that's not true. His advice on all things financial is excellent. Most of it is common sense, which seems to be very uncommon these days.
In short, I have a written monthly budget made out for the whole year that I follow and use Quicken on the computer. These two things are my main management tools. I also opened a couple more checking accts and savings which kind of act like electronic envelopes. The envelope system is discussed in the TMO book. It's all "old school" money management....... like my Grandparents did. I'm teaching my teenagers right now on how to manage money. The "save" "spend" and "give" lessons.