Every year, at the end of the year, I review the year’s spending. I’ve done this for over 20 years, and I learn different things every time (here are my lessons from 2021).
Reviewing our spending by category, or even thinking about what category to include, means that I can really look at where my (our) money is going. Which can prompt further reflections, like: is this where I want my money going? Does that seem like a good amount of money to spend on that category?
It’s also good to know how much money it takes to support our lifestyle. Since finding out about FIRE, I realize this exercise is even more helpful. After all, once I have 25 times (or 30, or 33, depending on how conservative I want to be) my yearly spending saved, financial independence has been reached. So, every year, I can ask myself: how close am I to reaching financial independence?
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