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Illustrate One Year of Expenses on a Target-Map™
Illustrate One Year of Expenses on a Target-Map™

Compare expenses with incomes for one full year

Michael Schwabe avatar
Written by Michael Schwabe
Updated over 7 months ago

How much money is left over after your client spends one year's worth of expenses out of one year's worth of earned income? Start with a Custom Target-Map.

Adjust What you have

  • On the "What you have" tab set the dates on the source(s) of income to reflect one year's income.

  • Add the earned income and other incomes streams that are to be included; those that are expected to come in during the timeframe.

  • Select "Date" from the Date Reference drop-down.  Feel free to choose January 1 of the next year as a Start Date and December 31 as the End Date.

  • Apply estimated loss to taxes.

👉 This will provide one year of spendable income.

Define What you want

Add after-tax Desired Cash Flows on the "What you want" tab. These are the annualized expenses your client is anticipating to spend during the timeframe.

  • Click "Add Desired Cash-flow" button and fill in the form.

  • Use annual values for the expense.

  • Select the "Date" choice from the Date Reference drop-down.

  • Enter a Start date in the near future and an end date one year later. Match them with the dates of the cash-flow sources you've selected on the "What you have" tab.

  • Save changes and repeat if necessary for other expenses during the year as desired.

👉 This is the spending money the client would need.

Make a few adjustments

  • Adjust the Annual Increase of Contributions and Expected Net Return to zero.

  • Enter "1" (one) in the Duration of Contributions to show the monthly surplus (or deficit) for one year.

See the results - What it Means

In the above example, why is the client underfunded for the year? It is because the tax implication entered on the earned income (25% in our example) has an impact when compared with their spending desires. The client falls $2777 short for each of the 12 months of the year.

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5/2024

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