Understand Your Projected Expenses Over Your Lifetime

Do-It-Yourself Financial Planning - Understand your projected expenses over your lifetime

Increased savings through conscious expenditure reduction is the largest and most controllable factor in long-term personal finance success.

Anyone interested in improving personal financial planning must understand that tracking expenses accurately and comprehensively is very important. Exactly how your expenses are tracked is not so important, as long as the results are relatively accurate. Greater savings through better expenditure control and/or increased income are not abstractions. Whether you will achieve your expenditure and savings goals depends upon your commitment to stay within your budget and upon your accurate measurement of your income, expenditures, and savings.

Along with your efforts to increase earned income, the savings factor largely determines your lifelong financial success or failure by steadily and more substantially feeding a rational investment program. Cleverness in the selection of particular investments is a far, far less reliable, less important, and most often negative factor in long-run personal financial success. (See these three categories of related articles on The Skilled Investor website: Selecting Investment Funds, Financial Decision Rules, and Financial Planning Process)

VeriPlan’s EXPENSES graphic for a professional couple with children

To develop your own highly customized personal financial plan, you can project your lifetime expenditures using VeriPlan. Below is an example of VeriPlan’s EXPENSES graphic, which is automatically and instantly generated for every projection that you make. This particular graphic comes from VeriPlan’s “Sue and Sam Saver” tutorial. This graphic shows Sue and Sam’s projected expenses across their lifecycle in a variety of expense categories, including ordinary living expenses, major planned expenses, and taxes.

Your expenses in VeriPlan will also reflect any projected adjustments that you make. In this case, Sue and Sam are automatically projecting the costs of buying a home in the near term and the costs of sending their two children to college when Sue and Sam are in their early 40’s. Using marginal tax rates, VeriPlan automatically projects federal, state, and local income taxes plus Social Security, Medicare, self-employment, and property taxes.

Demonstrating a comprehensive projection for a professional couple with children, the VeriPlan tutorial can help you to understand what VeriPlan can do. Use this link to download a free copy of the VeriPlan tutorial file:

DOWNLOAD THE FREE VERIPLAN TUTORIAL NOW

VeriPlan’s EXPENSES graphic projects your expenses related to living expenses and the taxes that are related primarily to non-asset earned and retirement income. The graphic includes:

* Ordinary living expenses with your real dollar growth rates adjustments

* Major planned expenses with your real dollar growth rates adjustments

* Your federal income taxes, state income taxes, and local income taxes related to earned income and retirement income

* Your federal, state, and local ordinary income taxes on asset income (reinvested interest and short-term capital gains)

* Your tax payments related to FICA (Social Security), Medicare, self-employment, property, real estate, and other non-capital gains taxes

Because ordinary earned income and ordinary asset income tax treatments are similar, VeriPlan combines both earned income and asset income sources here for taxation purposes. Generally, most asset income taxes will be from current interest and dividend payments on cash and bond/fixed income assets. [This graphic excludes investment expenses related to their asset portfolio, which are presented elsewhere on VeriPlan’s asset-related investment efficiency graphics.]

Click here to learn more about Financial Planning Software

Related Personal Financial Planning Posts

• Schwab S&P 500 Index Fund - Select Shares (SWPIX) achieve a +8 Fund Authority Score (Fund Authority Scores rate mutual funds and exchange traded funds (ETFs) on the most important economic factors that influence individual investors' net long term diversified investment fund performance. The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise, objective, and realistic summaries of mutual funds and ETFs for comparisons within [...])
• If Personal Finance is Difficult - Carefully Hire a Good Advisor ( If personal finance is difficult for you, carefully hire a good financial and investment adviser A previous financial article, “The Solution - ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that investors are much better off with a well-considered financial plan. A stable set of [...])
• The John Bogle Blog and His Financial Article About ETFs ( John C. Bogle's Blog and his article about ETFs This article is a heads-up to people interested in investment blogs and personal finance blogs. John C. Bogle, the founder of The Vanguard Group, Inc., has a blog called The Bogle eBlog. (If you are wondering about "eBlog," it is an anagram of Bogle.) Mr. Bogle just posted [...])
• Set your personal savings and other financial goals - Step 2 of 10 Financial Planning Steps in the Right Direction (CLICK HERE TO READ THE SKILLED INVESTOR's OTHER ARTICLES ABOUT THESE "10 FINANCIAL PLANNING STEPS IN THE RIGHT DIRECTION." The single most significant financial lever that individuals control directly is their management of personal expenditures. The second is their lifetime effort to obtain sufficient income. Most people simply do not save enough of their current income [...])
• Retirement Savings Needs of Renters Without Financial Planning Improvements ( Retirement savings needs of renters prior to any financial planning improvements Starting to plan with a non-optimal baseline projection Fran and Fred Frugal, both age 30, are a married working couple with $100,000 in combined annual earned income. They want to understand how valuable different personal finance strategies could be to their lifetime finances and retirement security. [...])
• Searching for Superior Investment Fund Managers is a Waste of Your Time ( Searching for superior investment fund managers is a waste of your money and time A previous article, “The Solution - ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that individuals are much better off with a well-considered financial viewpoint. A stable set of financial beliefs [...])
• Schwab S&P 500 Index Fund - Select Shares (SWPPX) capture the Best +10 Fund Authority Score ( Fund Authority Scores rate mutual funds and exchange traded funds (ETFs) on the most important economic factors that influence individual investors' net long term diversified investment fund performance. The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise, objective, and realistic summaries of mutual funds and ETFs for comparisons within [...])
• Choose Lower Mutual Fund and ETF Management Fees ( Choose mutual funds and ETFs with MUCH LOWER investment management expenses Investment fund management fees can only be justified by individual investors, if higher net returns more than compensate for these fees. Sadly, this is most often not the case with actively managed equity and bond mutual funds and exchange-traded funds (ETFs). In addition, you have [...])