# What % of you net family income do you spend?



## gibor365 (Apr 1, 2011)

Was bored today and decided to do simple calculation what % of our net household income we spend... I've got 80% in first 11 months of the year... After getting bonuses and RSU in December , % will be about 70% , but still very high... What % of you net family income do you spend?


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## cainvest (May 1, 2013)

I don't check that often but based on my last figures it'll likely be around 40% right now.


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## DmDave (Dec 1, 2014)

I'm around 40% as well, based on my last year's income and expense. This year will be around that same figure as well.


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## scorpion_ca (Nov 3, 2014)

30% monthly but if I include bonuses and company matched RSP contribution, it would be around 26%.


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## Plugging Along (Jan 3, 2011)

I don't understand the question. Spend on what? Do you mean disposable income? Or are you just saying what is your savings rate? Isn't it Anything you don't spend you save?


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## nobleea (Oct 11, 2013)

Youd have to define what spend means. Are debt repayments spending? Or just the interest? What about prepayments? Do you increase your net income based on your RRSP contributions at work?

I think we're at about 50%. That's with the wife going back to work part time after maternity. Full time it would be closer to 35/40%.


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## nathan79 (Feb 21, 2011)

Varies between roughly 35% and 90% depending on income & spending... average would be somewhere right in the middle of those figures. Last month I spent 89%, which is about as high as I ever get under normal circumstances (aside from large purchases such as car or trips).


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## gibor365 (Apr 1, 2011)

Plugging Along said:


> I don't understand the question. Spend on what?


Spend on whatever you want! Doesn't matter debt. prepayments, trips abroad or LCBO  . Your household annual Credit (just net income exclude interests, capital gains etc) divide by Your household annual debit... yes, you can say it's a saving rate

_Do you increase your net income based on your RRSP contributions at work?_ No  it will be more complex to calculate... I also don't include potential RSU, only thaose that vested and we got real cash into our checking account..



> Last month I spent 89%, which is about as high as I ever get under normal circumstances (aside from large purchases such as car or trips).


 I also included 4 trips abroad.... (one of them is prepayment for next years) , as trips are our "normal circumstances"


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## gibor365 (Apr 1, 2011)

cainvest said:


> I don't check that often but based on my last figures it'll likely be around 40% right now.


I actually checked it for a first time  was thinking it's about 50% and was surprised to see 70-80% figure... and this is considering that we don't have any debt or loan ...and gross household income higher than 200K ..... maybe we pay too much taxes?!


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## PrairieGal (Apr 2, 2011)

Since your question asks about net family income, isn't taxes a moot point? Net income is the money that goes into your bank account after taxes, etc.


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## LBCfan (Jan 13, 2011)

Define income. Does it include unrealized capital gains?


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## Plugging Along (Jan 3, 2011)

So savings rate then based in after tax income 

One would think this should be an easy question. 

My answer. I dunno.... 

I know how much we save per year on our own, i know how much we contribute to our company plans. Then we have our regular our consulting business where %100 of profits are retained. I haven't included our rental income, so is the saving based on the cash flow, or on the total amount coming in and going out to include the cost of business. 

Wow, I really have no idea.


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## cainvest (May 1, 2013)

gibor said:


> I actually checked it for a first time  was thinking it's about 50% and was surprised to see 70-80% figure... and this is considering that we don't have any debt or loan ...and gross household income higher than 200K ..... maybe we pay too much taxes?!


I did the calculation of adding up all my expenses for a year as part of my retirement planning. It helps to have a baseline on what your lifestyle currently costs you in order to plan ahead and your % question just takes the current net income level into account.

As far as your "pay too much in taxes" question, shouldn't it be your expenses are to high for your liking considering it's net income?


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## brad (May 22, 2009)

Agree that without a definition of "spending" this isn't very useful.

If you include mortgage paydown of principal as spending but not taxes or retirement contributions, we spend about 35% of our combined gross income. If you exclude mortgage payments we're at around 18%.


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## gibor365 (Apr 1, 2011)

Plugging Along said:


> So savings rate then based in after tax income
> 
> One would think this should be an easy question.
> 
> ...


Actually it's an easy question and simple calculation... we have joint major saving account, so I sum off credits and sum all debits... let's say your credits 200K and your debits 150K... in this case you spend 75% of your combined income and save 25% 



> Define income. Does it include unrealized capital gains?


 No... your unrealized capital gains can become unrealized capital loss during 1 year , you just exclude your transfers in and out of chequing account...by income I mean your salaries, bonuses, RSUs (that actually deposited to you checking account), income from rent and so on.
Spending - everything that you spend include debt payments, mortgage/loan payments, medical/dental expenses that not covered under your benefits, and don't include transfers to your non-reg accounts, TFSA or RRSPs


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## My Own Advisor (Sep 24, 2012)

Using net income:

-Trying to use 10% for mortgage prepayments
-Trying to use 10% for RRSPs
-Trying to max out TFSAs every year and then after that, spend the rest.


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## newfoundlander61 (Feb 6, 2011)

We spent a total of 47% monthly of net income, remaining 53% is invested momthly.


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## gibor365 (Apr 1, 2011)

My Own Advisor said:


> Using net income:
> 
> -Trying to use 10% for mortgage prepayments
> -Trying to use 10% for RRSPs
> -Trying to max out TFSAs every year and then after that, spend the rest.


From about 20% saving we have: 
- maxing up RRSP
- maxing up TFSA
- maxing up RESP (for 2nd kid, 1st already in university)
- rest putting in HISA/GIC

MOA, regarding mortgage.... I don't know your exact situation....but we took mortgage with flexible rate link to prime, than converted it to LOC, paid all ASAP (hate being in debt) , completely finished paying about 8-9 years ago and than started to max RRSP


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## Soon Forget (Mar 25, 2014)

gibor said:


> MOA, regarding mortgage.... I don't know your exact situation....but we took mortgage with flexible rate link to prime, than converted it to LOC, paid all ASAP (hate being in debt) , completely finished paying about 8-9 years ago and than started to max RRSP


No RRSP contributions until mortgage was gone? Even if you were in 35-40%+ tax bracket?


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## gibor365 (Apr 1, 2011)

Soon Forget said:


> No RRSP contributions until mortgage was gone? Even if you were in 35-40%+ tax bracket?


First of all there is employer group RRSP/LRRSP contribution or pension adjustment and it takes more than half of the contribution room...
Also usually income is going up every year and you falling in even higher tax brackets....in our example sinse we paid out mortgage , our income at least doubled...ans we wish we'd have more room from previous years


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## Soon Forget (Mar 25, 2014)

gibor said:


> First of all there is employer group RRSP/LRRSP contribution or pension adjustment and it takes more than half of the contribution room...
> Also usually income is going up every year and you falling in even higher tax brackets....in our example sinse we paid out mortgage , our income at least doubled...ans we wish we'd have more room from previous years


Gotcha. I'm self employed in 43% bracket so I max my RRSP contribution every year even though we still have a substantial mortgage. Without an employer plan I don't think I'd be comfortable saving nothing until the mortgage was dead and then playing catchup.


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## gibor365 (Apr 1, 2011)

Soon Forget said:


> Gotcha. I'm self employed in 43% bracket so I max my RRSP contribution every year even though we still have a substantial mortgage. Without an employer plan I don't think I'd be comfortable saving nothing until the mortgage was dead and then playing catchup.


This is why i specified that this our situation  came to canada in 1999 and 3 months later bought detached house in Mississauga for 232K, also we paid very big downpayment... and later it was in our favour .... when my wife got laid off and got very big package, she had very big contribution room to avoid payimg big taxes


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## My Own Advisor (Sep 24, 2012)

Hey gibor,

Well, with our current saving rate and b/c of lucky pensions at work, the RRSPs might be maxed out in a few years. 

TFSAs hopefully maxed out in 2015.

That leaves mortgage and a taxable account. I wish to avoid putting too much into a taxable account now, so, mortgage it is.

Once the mortgage is done, 6 years from now, mid-40s, I suspect our saving rate should climb to about 60-70%.


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## 1980z28 (Mar 4, 2010)

I keep 75%
I spend 25% on stuff to keep things moving along
No mortgage for a long time
zero debt of any kind
Borrow money back in 1980 something for mortgage,I believe around 40k for house that was 78k at 12%,7 years later no mortgage,this is my 4th house,one more to go which is 80% finished and paid,tfsa maxed and rrsp maxed,I have a 2 channel audio hobby which is vinyl


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## gibor365 (Apr 1, 2011)

OK, after getting bonuses and RSU in December , our spendings are 66% of our earnings (again investing / income is not included, only salaries minus physical spendings). .... on one hand 66% is a little higher, on other hand when you almost 50 , you want to enjoy rest of your life


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## My Own Advisor (Sep 24, 2012)

You still gotta live gibor!


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