Do you know how much you spend each year?
Understanding your household expenditure is an important part of a Financial Plan.
When we engage with clients, we ask them to complete a detailed expenditure questionnaire.
The data from this forms a part of their Financial Plan, feeding into the lifetime cash flow forecast we prepare and present along with our recommendations.
The simple act of filling in an expenditure questionnaire, categorising different items of spending as you go, can prove both challenging and eye-opening for a lot of people.
New research from the bank Santander has found that people tend to underestimate their main household expenses by an average of £1,459 in the last year.
These main items of expenditure are council tax, utilities and TV, phone and broadband.
Collectively across the whole UK, that could mean we don’t know how much we spend by almost £39bn a year!
[tweet_box]We underestimate our main household expenses by a collective £39bn a year[/tweet_box]The research found that people estimate they spend an average of £2,528 a year on council tax, utilities and TV, phone and broadband.
In practice, they actually spend an average of £3,987, nearly 58% more than estimated.
TV, phone and broadband outgoings were the most significantly underestimated.
Getting your household spending under control starts with understanding what you spend, and of course why you spend it.
By examining expenditure as part of the Financial Planning process, we can help to bring some reality to what you spend and put it in context of what you want to achieve.
If you would like to see our expenditure questionnaire and start taking control over what you spend, email me at shelley@icfp.co.uk and I would be happy to send you a copy.
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