Knowing your monthly expenses is a good first step toward saving money

If you’re broke at the end of the month wondering whether you can afford a night out for fun or even to buy gas, a Northern Virginia financial consultant has advice.

First thing, you need to get a sense of today’s true monthly expenses to create as accurate a budget as you can.

“Last year, you may have been spending $200 to $300 a month on food. Well, now that may be $400 or $500 a month on food,” said financial professional Chase Lopez from ILG Financial in Stafford, Virginia.

“This is something that you really want to be on top of on a monthly or every six-month basis, because prices are changing very rapidly right now. So you really want to make sure that you’re still spending X amount of dollars on food, gas, all those different things,” he said.

Lopez recommends checking bank statements monthly to get a sense of what you’re spending for the past six months or so for a few different reasons.

Financial professional Chase Lopez from ILG Financial in Stafford, Virginia. (Courtesy ILG Financial)

First, it can allow you to identify ghost payments you might have forgotten about and or might want to cancel.

“A lot of times, you’ll have a subscription that you don’t [remember] that’s just been auto drafting out of your account,” he said.

“Once you can get rid of all those extra expenses, that maybe are unneeded, that can really start to shape how you can save for your future.”

Another reason to check bank statements is related to what Lopez calls one of the most common mistakes people make: underestimating how much they’re spending to eat out for lunch on workdays at the office.

And, if you’re serious about cutting expenses, maybe it’s time to ask your household serious questions.

“Look at your bank statements, probably for the last six months to a year and say, ‘Hey, do I really need this stuff?’ For example, if you have maybe, Netflix, Hulu, Disney +,  all the different subscriptions for videos out there. Maybe you pare that down a little bit,” Lopez said.

“Really, it’s just about looking at those individual expenses and weighing how important they really are to you.”

The other side of the ledger sheet involves how much money is coming in.

“Knowing exactly how much money is coming in after taxes and then knowing exactly how much money is going out is really the key to building that financial future that everyone’s looking for,” Lopez said.

There are apps to help people track income and expenses. Kiplinger’s Personal Finance parses some of them on its website.

Kristi King

Kristi King is a veteran reporter who has been working in the WTOP newsroom since 1990. She covers everything from breaking news to consumer concerns and the latest medical developments.

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