Net Worth Poll

[RetireJapan]

Can you add one more option:

"Less than one month of spending".

I'd just like to be able to take part in the poll!

That comes under 'less than one year'

[ayetobee]

Is there a post on how you calculate your annual spend?
I saw the RetireJapan blog post this week on the three types of spending, which is a good start.
I started taking my spending seriously some time ago by finding the number in my bank accounts on Jan 1 and subtracting that from Dec 31st. The difference being our annual living expenses. There is an entry for each expense in my account and I could paste it to excel I could then categorise them all.
I was horribly surprised the first time I did this and created a budget as a result, which resulted in a really frugal lifestyle (e.g. cycling to work in rain, hail, or shine). We bought our first house within three years though.
The budget had four types, the same as those mentioned in the blog post but also retirement savings which meant we had specific accounts for each (Baseline (Daily Expenses), Discretionary (Big Box), and Indescretionary (Holiday)). Retirement savings was an automatic withdrawal into a high interest-bearing account without a debit/credit card attached. Has worked well for us.
Does anyone else have insight on how you calculated this?

[TokyoWart]

Is there a post on how you calculate your annual spend?

I've found it's very easy to do this by tracking income (which takes almost no effort for those of us with a single employer) tracking saving and then noting the difference as annual spend. I take the extra step of tracking total taxes paid because that comes up as an item on my tax returns. I don't really track individual expenses or use a budget that adds up expenses, only net savings.

[captainspoke]

I like the annual picture, too. It's a top down view, an overall snapshot*, vs bottom up. (and I'm lazy)

If you need more after seeing that, then start adding details to the degree needed. Even if a person starts with specific details (bus fees, cafeteria lunches), it's the overall view that that needs to lead to.

How? I have two bank accounts--as you suggest, look at the balances the first week of every January and go from there.

*known in film as an establishing shot.

[RetireJapan]

Long term readers will know that I am very lazy, so I do something similar.

I know how much our big spending items are, I know our rough income, and I know how much we save/invest, so I just kind of guess from that.

As long as we are saving/investing enough I'm not too bothered about accurate numbers for everything else.

Having said that, when we get closer to retirement I might start tracking things a bit more carefully to get a better picture.

[Tokyo]

For me, life was far too busy while we were working to have an accurate idea if expenditure. And it didn’t really matter as we had plenty of income, few costs other than chunks going out for automatic savings and investment.

This all changed when I retired. I suddenly had lots of time, reduced income and having an accurate picture of total expenditure became important. I bought a notebook to record monthly expenditure; there usually are a few varieties of household budget notebooks in any Japanese bookstore. I break down monthly expenditure into bills, shopping, groceries, entertainment and meals but only because I wanted a clear idea of my outlays for those categories. It’s been easy to calculate my annual spend pretty accurately.

What has been surprising is that I have had more income, without working, than expenditure for all 5 years of retirement. I haven’t been trying to save but it’s being forced on me by a desire not to accumulate more stuff, and the pandemic stopping us from roaming the world. C’est la vie!

[captainspoke]

Gee, given the last couple weeks, can I revise my answer...?

[7-seasons.com]

Anyone notice how this post almost exactly called the market top?

[TJKansai]

What has been surprising is that I have had more income, without working, than expenditure for all 5 years of retirement. I haven’t been trying to save but it’s being forced on me by a desire not to accumulate more stuff, and the pandemic stopping us from roaming the world. C’est la vie!

Not a bad position to be in!

The space limitation=less stuff is a good passive restraint.

An uncle of mine downsized his life as he got older, to the point he had two condos in retirement and would rent one and live in the other, according to the season. He finally sold them and rented furnished places after that. Their only important possessions were pictures, and even those got digitalized.

I read somewhere about an accountant who had to remind his well-off clients to spend more money. You can't take it with you...

[Tokyo]

Not a bad position to be in!

The space limitation=less stuff is a good passive restraint.

An uncle of mine downsized his life as he got older, to the point he had two condos in retirement and would rent one and live in the other, according to the season. He finally sold them and rented furnished places after that. Their only important possessions were pictures, and even those got digitalized.

I read somewhere about an accountant who had to remind his well-off clients to spend more money. You can't take it with you...

I wholeheartedly agree with your uncle’s approach. Downsizing was neither quick nor easy since we aimed to ditch/donate/sell at least two-thirds of our stuff, but it was incredibly liberating. It’s the most worthwhile thing we’ve done since retiring, right up there with travel. Because of the Japanese inheritance laws giving massive tax benefits to passing on real estate, however, we will not sell off and rent.

Yes, I totally agree with you on the need to spend more. The motivations for tracking my expenditure was to ensure that I can cover my costs, continue charitable donations, and to determine how much I can spend assisting our children and grandkids. Now that I have this concrete record for several years, I can increase my spending without any worries or regrets.