What’s Your Annual Spending Report? Plus, How It Can Help You Budget Better

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How do you feel about your money?

If you were one of the over 2,000 people surveyed in Personal Capital’s 2022 Wealth and Wellness Index survey, you might say that your current financial position isn’t exactly where you want it to be. 

The survey highlighted that fewer people are confident about their finances than last year. At the beginning of 2021, 48% of people said they felt “very financially healthy,” and that number dwindled to just 34% by year’s end. 

What gives?

While many people struggled to meet various financial goals in 2021 (having an emergency fund, saving consistently, ability to make large purchases when needed, etc.), respondents said that one of the most pressing concerns is their rising debt. Even more, paying off personal debt in 2022 was the most important financial goal for the survey respondents.

One way to help make this goal a reality is to understand your spending habits. 

Where can you find this information?

Take a look at your annual spending report. 

An annual spending report is a feature you can access via your credit card company, and it provides a detailed breakdown of your spending habits throughout the year.  

Analyzing this report can help you use your big picture spending as a springboard to spend more intentionally and put your resources where they count most.

What’s Your Annual Spending Report and Where To Find It

Most people think of tracking their spending with a budget, but another way to see your cash flow in action is checking out your annual spending report from your credit card company.

While some companies call it by different names—year-end summary, yearly spending, my spending report, etc.—the process works the same. 

An annual spending report details your expenses throughout the year; yes, the entire year! These reports typically break your spending down into bite-sized pieces, whether temporal (quarterly, monthly, weekly, etc.) or by category (entertainment, housing, utilities, etc.).

This way, you can see how much you really spent on home projects throughout the pandemic or how much you saved by cooking at home more often—exciting stuff!

Your annual spending report considers your spending habits from a macro level, allowing you to notice trends and make plans without stressing over every purchase. 

To find your report, log in to your account, search for your year-end summary, download the file, and voila, your spending is at your fingertips!

Evaluating Your Report Keeps The Big Picture In Focus

After you’ve looked at your report, are you surprised by what you found?

If you’re spending more than you thought, don’t over-stress. Many people actively spend far more in certain areas than they initially realized. 

Sometimes when you purchase items in isolation, it can seem like a “one-time” thing, when actually, it’s pretty regular, like treating yourself to little luxuries such as eating out, online shopping, home spruces, etc., consistently.

Before you go slashing your entire spending budget, take a step back and identify a few areas where you feel like you’re spending too much. Next, widdle that list down even further to just one area. Focusing on reducing spending, even in one category, could make a significant difference over a year. 

Say the spending report revealed that you and your partner eat out 3-4 times a week and spend about $15 per meal, anywhere from $90-$120 a week or $4,680-$6,240 per year. 

Together, you decide to aim only to eat out 1 time per week, whether at a restaurant or takeout. By doing so, you’d put yourself in a position to save thousands—yes thousands—of dollars a year. Plus, you could redirect all those savings to build up your financial security—creating an emergency fund, paying off debt, saving for retirement, and more!

Why Focusing On Broad Spending Categories Is Important

Thinking about your spending in larger categories instead of individual transactions can make the budgeting process far less stressful. 

Budgeting isn’t the most popular financial tool in part because it can feel restrictive and constraining—and as we’ve learned from now over two years in quarantine, no one likes to be stuck in a tiny box. 

When you focus on your comprehensive spending categories, it’s far easier not to get weighed down by the extra coffee you sprung for with friends that technically wasn’t in the budget. 

By taking a step back, you can evaluate your spending from a higher level. So, instead of stressing over the extra date night this month, take a look at your entertainment expenses as a whole. 

If they’re up or down, ask yourself why that might be. 

  • Where are you increasing and decreasing your spending? 
  • Is that where you want to be? 
  • Is this spending holding you back from reaching your financial goals, like consistent saving and debt repayment?
  • What does spending money in a particular area mean to you?

Extraneous spending on an overpriced sweater you will only wear once likely won’t bring you lasting joy and fulfillment. But spending money on a designated date night with your spouse that nurtures your relationship can bring more purpose to your spending.

Knowing Your Habits Helps Avoid Surprise Spending and Plan for Big Purchases

Whether you love or hate surprises, many people agree that they’d like to keep surprises away from their spending as much as possible. 

Some surprise spending can feel positive, like buying your best friends a wedding present or helping throw a baby shower for your sister. But others, like buying a car that’s too costly or jumping into a home renovation without doing your homework, could end up causing stress later on. These were costly splurges I watched clients spend money on during the pandemic. Now, some regret having a large monthly car payment or a high balance on a HELOC that they need to pay off.

When you think about your expenses annually, decide if this is an annual expense you want to save for i.e., gifts, car repairs, etc., or a bigger one-time expense that could happen at a later date, like a home renovation. 

It might be good to have an annual savings bucket for “gifts” or “car repairs” just like you might have for travel. These expenses aren’t quite as random as we think when we’re only viewing our spending monthly. At the same time, you might need to save up more money for a home renovation or car purchase than you realized.

You’ll Feel More Fulfilled When You Align Your Spending With Your Values.

The pandemic has certainly altered many people’s spending habits. 

Now, it’s not uncommon for people to skip their expensive vacations and restaurant hopping and trade it for a new home office set up, revamping their outdoor space, upgrading their dated appliances, more cooking at home, etc.

Why?

Because those are the things that mattered most to them in that season of life, but with vaccination rates climbing and locations opening their borders, travel may see a resurgence of popularity in the coming years.

Is travel something you want to work back into your spending?

If the answer is yes, create a plan for those added costs now, so you have the funds when you need them. Remember, that might mean cutting expenses in other areas, like waiting to remodel your basement or adding a pool to your backyard.

Don’t forget to take a look at your credit card rewards, frequent flyer miles, or flight vouchers from trips you canceled during the pandemic. Make sure you’re utilizing your travel rewards so you don’t miss out on a flight credit that will expire this summer or a hotel voucher for a free night that needs to be used by year-end. The cost for adding travel back into your life might be more affordable than you think!

Your spending plan should be flexible and change as you need it to. When you spend in ways that enhance your values—family vacations, cooking dinner together in a nice kitchen, etc.—you’ll bring fulfillment and purpose to every dollar. (If you would have told me in 2018 that I would cook dinner for my family most nights, I would have thought you were crazy! But I’ve really enjoyed cooking this last year in our new home!)

Bringing awareness and intention to your overall spending can help you make smart and strategic financial decisions that benefit you long-term. 

Here’s your homework:

Download your annual spending report and pick one category where you can spend less this year. Make your selection based on what’s most important to you. 

You’ll be amazed at how even paring down spending in one area can transform your financial health for the better. 

 

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