Working Wealthy – Where Does the Money Go?

Have you ever asked yourself, “Where does all the money go?” You’ve probably done so at least once or twice during your lifetime. Most people leave the question dangling and then pour a glass of wine or unwrap a chocolate.

However you cope with understanding your spending habits, you should be commended for at least considering the question. It’s a well-known truth within the practice of personal financial planning that controlling your expenditures allows for financial success on several different levels.

To be sure, understanding your spending is worthwhile, whether you have more money than you’ll ever need, or need every dollar you have.

Figuring out how much you’re spending is not the drudgery you might imagine. Consider these three options (in descending order of detail) to help you find answers.

1. Your tax return is a fountain of truth

Taxes are unpleasant. We all have to pay them, but very few people actually enjoy the process. However, your tax return can be a quick and easy way to understand how much money you’re using. Starting with a big number can be useful, so taking your Total Income (Form 1040, line 9) and subtracting your Total Tax (Form 1040, line 24) will give you that number. From there, you can divide by 12 to see approximately how much money you’re using each month.

2. Go back in time

If you use a credit card or checking account for most of your expenses, consider going back to your old statements, or even transaction histories, to parse out your spending. Start by breaking down your spending into big categories. Don’t get caught up in the details of Whole Foods over Safeway, for example. They’re just groceries. Most financial institutions will have transaction histories going back many years. Focus on a year when your life was typical—no large outlier expenses—and use that data to start breaking out where your money went (and how much), compared to where it’s going now (and how much). The insights you gain might surprise you.

3. Track it

There’s more than one way to track your spending, but it can be a good idea to do it in real time. Consider using an online platform or app made for this purpose. Do your homework and be wary of any app that shares your data with third parties or tracks your personal information. For instance, check out apps for tracking household spending that only record what you use on your credit cards. Your checking information should stay private with apps like this, and you won’t need to share your income data. It’s important to stay protected.

Recognizing how you use your money is a healthy exercise. Let’s remove the guilt and pain from figuring it out, and look forward to learning from the process. It could be a real eye opener that helps you strengthen your financial situation for many years to come.


Nick Cosky, CFP

Nick Cosky, CFP

Partner, Wealth Advisor

Nick is a Partner, Wealth Advisor in our Itasca, IL, office. In his role, Nick is primarily responsible for introducing prospective clients to the firm. Nick served as the head of legacy firm BDF’s Financial Planning Committee and has participated on the Business Owner Team. He is passionate about the goals-based planning that BDF does for its clients and enjoys focusing on the behavioral aspects of decision-making. Nick is a CFP® professional.


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