How To Calculate Your Future Expenses?
Expenses are a part of everyone’s lives and it is something that we neglect most of the time. Managing
ones expenses can be very helpful especially if you are having trouble balancing things out and if you
have tons of debt. That is why it is very important to calculate your expenses to keep track of it regularly
and to keep everything in order. If you want to get started on monitoring and calculating your expenses,
here’s how you should do it.
You first have to calculate your current expenses in order to compute for your future expenses:
To get started, make sure you have a list of all your expenses within a month. Include in your list
your rent, grocery budget, utilities, entertainment expenses, everyday allowance etc. then add
everything up. No matter how small it may be, make sure you add it in your list to be able to
compute everything well.
If you’re done listing it down, you can now move on to your monthly income (you can also add
other sources of income) then subtract your expenses to this. If you get a negative number then
you might to adjust some of your expenses but if there is still something left for you then you’re
If you already have a computation of your current expenses, you might want to gauge what your
future lifestyle will be. It is expected that all the expenses in the future will be rising so it might be
best to compute the average inflation rate which is around 5% for the past 10 years. let’s say you
want to figure out your expense for the next 5 years, So for example your current monthly
expense is P 20,000 a month…
Future value = Current value (1 + i)n
Future value = 20, 000 (1 + .05)5
Future value = 25, 525.00
This means that you should be preparing at least 25k for the next 3 years for your monthly expenses.
Always put in consideration some of your credit debts as well (this will ensure that your credit score and
credit report free are in good shape), pay for them regularly. Also, you have to allot an emergency fund
for yourself, so if you really want to secure your future, you have to start saving early.
Calculating your expenses early on will help you avoid getting buried in debt. This will help you anticipate
what you’re going to need in future and there’ll be fewer problems to deal with. So calculate your
expenses now and stop worrying about having an unsecured financial future.
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