Summary: In this video, Christa Hudak, CFP®, ChFC®, CKA®, Cofounder and President of CoCreate Financial, explores an important but often overlooked part of financial health: knowing where your money is actually going. She outlines out a simple exercise to track your expenses for a small period of time so that you can see clearly where you are spending, identify any areas where spending may be out of alignment with your priorities and make any changes that you would like. Remember, it is okay to use your resources! You want to ensure you are spending on the things that truly matter to you.

2025.09.24 Podcast Episode 7

FULL TRANSCRIPT

Christa Hudak: Do you know how much money you spend? Most people don’t. But it’s an important number to be aware of. Before we get too far let’s talk about why this is important from a financial planning perspective.

The first reason is that good retirement planning requires that we understand how much money you’re spending in the present because we’re going to base what we want your retirement expense to be like on that number.

Everybody’s lifestyle is a little bit different and even if you’re planning to make some adjustments in retirement either up or down it’s going to be about adding or subtracting from this number. And basing it on what your current situation is.

The second is that a lot of people want to make adjustments before they hit retirement. Maybe you’re thinking about changing jobs to get something that is going to have a different outlook for your earning or starting a business or something along those lines. Being able to pull this number will give us an understanding of what’s feasible for you and what the adjustments you’re going to have to make are going to look like.

And then finally if you’re overspending, this is a critical issue and awareness of your spending is the first step in fixing it.

So this might sound simplistic, but I’m going to walk through each piece and cover multiple situations in exploring this concept of how much money do I spend and look at it from a couple different angles.

The first thing is just in a very broad overview to ask, “What’s happening to my balances over time?” So, this is just looking at a snapshot. Where does everything sit now, and where did it sit maybe six months ago, and a year ago? So, do you have any growing consumer debt? If that’s the case that’s a critical overspending problem that you’re going to want to address. Or, maybe you don’t have any debt growing but you don’t have any savings accumulating either. Everything that comes in goes out and all the balances are staying flat. This is a very normal situation because it’s almost like magic that if we don’t have a plan when more money comes in it just goes out.

And then finally if you truly are spending like than you’re earning you’re going to see a pile of money accumulating somewhere. So, if you are not spending everything you are making or overspending, there should be evidence of that someplace in the form of a growing account balance.

So now that we have an idea of your general situation let’s work on identifying how much you’re really spending. Now, you could start with tracking all of your expenses for a couple months and looking at that but the problem with that is most people are not consistently good at tracking their expenses and it’s also going to delay our ability to provide any analysis or look at what’s going on. So, that’s not a strategy that I would start with and it’s going to delay our ability to jump into some meaningful planning.

The other misstep I see is that if I were to hand you a budget worksheet for you to fill out what would you do? You’re going to put down the information you know, you know you’ll pull some number, and you’ll write down accurately things like your mortgage, your car payments, your insurance bills, and maybe even your utilities. But then you’re going to get to some categories like clothing, and eating out, and travel, and your grocery bill and you’re probably just going to start throwing down some numbers that you say, oh its probably about this.

Well, the reality is that’s not going to be an accurate number to work with, and it’s not going to be a good foundation for being really realistic of what’s going on in your situation.

So here’s what I want you to do instead. Get a worksheet or an excel file if you like those kinds of things, and then I want you to pull at least three months of all your bank statements and credit card statements. But you could go for a longer time period, all the way up to 12 months if you want a really good, consistent picture.

And then I want you to go through and categorize every transaction. Now you can decide how specific you want to be in your transaction categories. You can get really granular if you want, but you can also give yourself broad categories too. That’s going to make it a little bit easier to work through it. The more granular you are the more opportunity you have to evaluate your specific spending but it’s a lot more work in putting this all together.

So, you’re going to go through and categorize every transaction, and I do mean every transaction. You’re going to come across things that you’re like well that’s an abnormal expense. That’s not going to happen again. And, I want you to include it. You can feel free to make a note about it, but to remove it would really give us an inaccurate picture because unfortunately a lot of times we find that even though it may not be that specific expense, abnormal expenses are actually very normal in life.

Now, for my small business owners I do want to make a note. This process is going to be a little bit more complicated for you. Because it’s common for business owners, especially small business owners, to put some expenses that they would have to cover personally on their business, and this can have a wide range of the level that this takes place of, you know some business owners might put lots of things on their business that are really personal transactions, whereas other business owners might have a very distinct separation from their business. But there might be certain things that if you didn’t own your business you’d have to go pay for it personally. A great example would be paying for your cell phone on your business. So, your phone is a business expense, and you’re using it in your business, but if you exited your business, you would have to go get a phone and pay for it. If we’re doing retirement planning we need to know about all those expenses that are going to get added to the personal side. So be sure to take a look through your business books and identify any of these expenses we would need to shift to the personal side, if you exited your business.

So now that we’ve worked through categorizing your expenses through a period of time, you can average that out both in total, and in each category. And then we’re going to just ask some questions and do some evaluation. What do you notice about your spending habits? What surprises you? Are there categories that you feel like should be lower or higher? And how do you feel about how you are spending your money? Are there any changes that you would like to make?

Remember, reviewing your spending isn’t about trying to spend as little as possible. Instead, it’s about having good information in order to plan. And making sure that you’re funding the things that really matter to you. Setting yourself up for long-term success and awareness of your habits. It’s certainly an opportunity to re-orient if you don’t like what you see, or to start some conversations. But it’s not wrong to use your resources.

If you’d like help developing your plan and managing your investments we would love for you to reach out to us at CoCreate Financial. Thanks so much and have a great day.