Where’s all the money go? 

Now is a good time to reflect on current spending as we work and live from home.  Spending in some areas may be up while other discretionary spending is likely down.  It’s possible more cash has accumulated in your bank accounts as non-essential spending has declined (overall) during the past eight weeks. Spending habits have likely shifted, to some degree, due to social distancing where we find that we have fewer interactions with colleagues, clients, and extended family.  As we’ve discussed on prior posts, cash flow drives everything and is responsible for a successful plan.  How does clarity on spending support your plan?

You now know what it takes to cover your essential spending needs by reviewing your bank or credit card statements.  This knowledge was determined not by creating a budget or painstakingly tracking every expense and dollar spent.  Take advantage of this opportunity to reflect on where your money has been spent.  Are you happy with what you see?  What insights are gained when you review spending?  Right now, the pace at which most of our lives move has slowed a bit and you are better positioned to answer the above question.  This will also allow you to prioritize other aspects of your cash flow.  What is being directed to cash reserves (after tax investing, and saving for future summer fun when life gets back to normal)?  Having an understanding of your minimum expenses will allow you to use automation to move the remaining dollars to a specific job description that supports your plan.

Think about your spending in “monthly terms”.  This is easier on your brain and it’s how many of us are compensated, and then again how we would be receiving funds during retirement.  Regardless of your life stage, the past two months have outlined your baseline of expenses.  This may allow you to reprioritize your spending and savings, or simply provide confirmation that your spending is sustainable and on track.

 

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