Know What You Spend

dw_rainYou need to know what you spend, every month. You can’t manage your finances, amass wealth, take nice vacations, or buy new boots for fall without that annoying guilty aftertaste, unless you know how much your life really costs. You might think you need $8,000 per month, but until you tally your statements and factor in the beach rental, the harrowing dental bill, and all those freakin’ baby diapers, you don’t really know.

Here’s an assignment for the data-challenged among us:

  • Gather up your bank statements for one full year. If you’re already hooked into a program like Quicken, great, use the Reports function.
  • Add together your total expenses for a full 12 months (make sure you’re including expensive months like August and December).
  • Divide by 12.

So now you know. Yes, it’s a lot of money, isn’t it? (Tip inspired this recent post on Ramit Sethi’s — funny Web site name, good resource.)

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