“I just can’t figure out where the money goes. We should be doing well with our salaries, but we never seem to have anything left over at the end of the month.”
My client’s frustration is shared by many other people I’ve worked with over the years, regardless of their age. Knowing the amount we spend, and who and what we spend it on, is one of the key questions to unlocking financial security. But it’s also the one we have the most trouble with, for many different reasons.
One couple I worked with years ago was transitioning through the husband’s job change. They had a very comfortable lifestyle and he was trying to decide what new opportunity he wanted to take on after leaving a CEO position. We calculated what they could safely withdraw from their investments while he was between jobs, and they agreed on the plan, but after a few months of significantly higher withdrawals, I contacted the husband. “I know we’re taking too much out of our portfolio, but I need to keep the peace at home, so I don’t want to question where it’s all going,” he told me. Conflict avoidance is one of the biggest reasons why couples don’t track spending.
Sometimes we don’t want to know the facts. A soon-to-be retired couple once came to us for help. They had an excellent income from their salaries, no dependents, and significant retirement savings, so I wasn’t sure why they seemed so nervous and uncertain about the future. Until they handed me twelve envelopes, each from a different credit card company. “We’ve never added up all the balances, because we really don’t want to know how bad it is,” the wife told me. Avoiding something doesn’t make it go away, but that doesn’t stop us from trying.
For most of the people we work with here at TAAG, the biggest roadblock is simply the speed of life. They’re too busy with the day-to-day responsibilities of work and family, they don’t have a system in place to track their spending, and they don’t want to take the hours of time they think it will take to get something in place.
But knowing what you spend is key to answering almost any financial question. Can you walk away from a job that is burning you out for a less stressful, lower paying one? Can you live on less income in retirement than your paycheck provides now? Can you afford to build a new home or move to a different part of the country? It all depends on your cash outflows.
If you’re avoiding conflict with your partner or ignoring the truth about your situation, recognizing the fact is half the battle, but you still have to work through the issues – maybe with a counselor – to make a change.
If time is your biggest roadblock to tracking what you spend, we can help you with that. TAAG has teamed up with technology to make it easier for our clients to track their spending through our TAAG 360° client portal.
Through TAAG 360°, your checking account and credit cards can be linked to provide you with daily downloads of your current transactions, already labeled for expense categories, and summarized in time frames you chose.
Expense categories can be changed, and the software can be updated to label all past and future expenditures correctly based on where the transaction took place, when it took place, and the amount you spent.
A pie graph of your total spending, divided into expense categories, allows you to quickly see your biggest outflows. Once you know what you’re spending, you can begin to set a budget to track how your spending compares to what you’d like to spend. You can adjust and tailor amounts and categories as you go. It is a flexible tool, constantly updating for what you need or want to track.
This time of year we’re inundated with graduation announcements, wedding invitations and parties to celebrate. They all involve gifts, and sometimes long distance travel expenses and wardrobe updates. Eating out, drinks with friends, vacations and other summer fun can all add up.
If you’re tracking as you go, and the process doesn’t involve writing down every single expense or typing it into a software program, you’re more likely to know where you stand and be able to adjust before it becomes a problem.
If you’re a TAAG client and you want to take advantage of the TAAG 360° tracking capabilities, let us know and we’ll help you get started. If you aren’t a TAAG client, and you’re frustrated by the spending questions you can’t answer yet, give us a call.