# How much do you budget for things???



## dilbert789 (Apr 20, 2010)

Another thread got me thinking about how much do other people budget for items compared to what we do as a couple people said it was easy to save 4-5k /month if you make just over 100k Try to keep your numbers in the same order so that we can compare easier.

House income after tax - around 72k or 6k/month

Mortgage & property tax - $1600
Utilities - $150

Car payment - $425 (financed, no warranty)
Car & Life & critical illness insurance ( 2 cars + bike) - $550
- cars - 03 civic, 07 torrent, + 05 dual sport + house insurance = $390/mth, the bike is only like $50 of that
- 250k term Life each + 50k critical illness(w/ return of premium option*see bottom note for explanation) each - $157 

Car Maintenance - ~$200 

Cable, Phone (home & 2 cells), internet - $275 bundled for a discount. 
- cable - ~$115 we watch A LOT of tv, so I justify getting the movie network...
- phones - ~ $110, I don't have a phone at work, we both use them a ton.
- internet - ~$50/mth not the highest package, but not the lowest. I'm a geek, if my internet is slow... I'd probably throw things.

Groceries - $360
Home supplies - $250
(cleaners, decorations, general house stuff, lawn care) 
- Not cleaning service, this is more for cleaning supplies (soap, Windex, laundry detergent.. etc)
- decorations - 2.5 years after moving into a house, this hopefully will start slowing down as I don't think there is much untouched wall space left.
- lawn care - not a lawn care service, but fertilizer, lawn mower maintenance, gas.. 
- general house stuff - new vacuum/ fan/ wood to build some more shelving/ replacement blender / etc... 

Pets(food & vet bills) - $150
- 70lb dog ~70/mth in food
- cat - $30/mth food
- vet on average $50, one month is $200, then its nothing for a few 

Total = $3960 / ~$6000(after tax) = 2000

$2000 is a long ways from 4 or 5k


* You pay a bit more, but if we don't use the critical illness insurance, after 15 years of the 20yr policy we can get rid of the policy and get the entire premiums back that we have paid on that part of the insurance. 
IE you pay 40/mth vs 30/mth, but at 15years you get a cheque for $7200. If you did $30/mth and $10 to an investment @4% you would have about $2500 in that investment, and would have paid $5400 to your insurance which you don't get back.


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## andrewf (Mar 1, 2010)

I think your car and phone/internet expenses are a touch high. But, if you're satisfied with your budget and you're achieving your financial goals, ignore what other people say.


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## brad (May 22, 2009)

I've actually just embarked on a budgeting exercise for the first time in years as it has become apparent to me that I'm experiencing lifestyle inflation and I'd like to rein in the spending a bit.

My approach to budgeting is to ignore the fixed costs and unavoidables, and just hone in on the variable expenses that I can control: food, clothing, travel, entertainment, that sort of thing.

I set myself a limit of $400 for food in my first month of living under a budget, and I blew it after three weeks. I bumped the budget ceiling to $450 and will gradually try to bring us back down to $400 but it won't be easy: we like to use good ingredients, including lots of organic produce. But we're virtually vegetarian, eating meat or chicken just a couple of times per month, so I'm surprised we spend so much on food. We only eat out maybe three times per month.

I think of myself as a person who only buys clothes two or three times a year, but my budget has proved me a liar, and this is one area where I can easily cut back. 

Looking at your expenses, it feels like your car insurance is high: granted I have just one car but it only costs me $800/year to insure. If I had two cars that would be $1600, which works out to $133/month. Maybe your critical illness insurance is raising the total you're reporting here for insurance? Do neither of you have disability/critical illness insurance coverage at work?

Home supplies also seems a little high to me, but a good chunk of that is probably the lawn service. My "household" budget is usually just $50/month or so, although I just finished having a new shower installed and that threw everything off.


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## Four Pillars (Apr 5, 2009)

I didn't understand that other comment said about saving $4k-$5k per month on $100k income per year (even with 2 people). You would need very low expenses to accomplish that.

A few points:

If the $100k is from 2 people making $50k each, then I think the net pay should be more than $72k per year. Probably high $70k's, so the monthly net would be ~$6,500 per month.

$550 for insurance is a lot. I don't think ours is more than $200/month.

Groceries - we spend more like $800/900 per month.

I don't think your expenses are out of wack at all. If you can save $2k/month then that's great.


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## Addy (Mar 12, 2010)

House income after tax - around 52k or 4350/month

Mortgage & property tax - $50
Utilities - $200 (we live in Winnipeg, winter heat is expensive)

Car payment - $0 (10 yr old van, no payments, rarely drive it)
Car & Life & critical illness insurance - $125
Car Maintenance - ~$200

Cable, Phone (home & 2 cells), internet - $175

Groceries - $400
Home supplies - $50 = 240/m for house cleaner = 290/m
(cleaners, decorations, general house stuff, lawn care) 

Pets(food & vet bills) - $0

Total = $1200 / ~$4350(after tax) = 2910

My husband also has a contracting business but he only works seasonally and even then, only occasionally (electrician) so that also adds to our pot of savings. We also put all our $ from our daughter (193/m in child tax money) into her RESP.


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## the-royal-mail (Dec 11, 2009)

I generally don't see a huge issue with your expenses. But IMO I would do things a bit differently. 

I for one think cell phones are nothing but a big money drain on your wallet and are grossly un-necessary. I've never had a cell phone. I sit beside a phone all day at work and all evening at home. For the few times I am not near a phone, they can leave a message. No need to be reachable 24-7. That right there would save you $100-200 a month. Then you must be spending a lot of money for luxury grade internet and cable TV service. Again, reduce these to basic cable and slower Internet. I spend about $100 a month for unlimited (slow) internet, phone with unlimited LD Canada/US/24-7 and basic IPTV.

I find your insurance to be quite high. But then you have 2 cars plus a bike. Does the bike have to be insured year-round? Is the bike even necessary? 

Lastly, the home supplies thing is quite high. Can you not clean it yourself? You're spending almost $3K a year on that. Seems too high.

The main drains as I see them are these aformentioned luxuries. They hold the key to reducing your expenses, if that is what you want to do.


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## the-royal-mail (Dec 11, 2009)

And $150 a month for pets? Wow. That's really high. This is another luxury.

We'll call you the Jones!


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## dilbert789 (Apr 20, 2010)

Four Pillars said:


> I didn't understand that other comment said about saving $4k-$5k per month on $100k income per year (even with 2 people). You would need very low expenses to accomplish that.


 I saw two separate people post that statement in the last couple days so it got me wondering. 



Four Pillars said:


> A few points:
> 
> If the $100k is from 2 people making $50k each, then I think the net pay should be more than $72k per year. Probably high $70k's, so the monthly net would be ~$6,500 per month.


Yes, we're actually more like $78k/yr, however right now my wife is on mat leave and we're closer to $65k/yr




Four Pillars said:


> $550 for insurance is a lot. I don't think ours is more than $200/month.
> 
> Groceries - we spend more like $800/900 per month.


For both car and life?
You spend a lot on groceries, but depending on family size and needs, might not be that crazy.


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## steve41 (Apr 18, 2009)

My view is that the proper approach to this issue is to start with the basics..... your age , gross salary, planned retirement age, loans and the current size of your nest egg... preferably differentiated by type (reg/nonreg/tfsa/realestate) and split by spouse.

Then you will be in a position to determine your spending/lifestyle. If you are just starting out, it is entirely possible that you might not need to be saving much, if anything. Or the reverse could be true.

Get a handle on your cash flow basics.... are you planning to leave an estate? die-broke? expect a future windfall? live a low key retirement or splurge? future lump sum spending needs?

Once you have a cash flow projection based on reasonable tax, rate and inflation estimates, then start analyzing the details of your current spending, and whether you need to cut back (save more) or relax and save less. 

Itemizing spending is not financial planning, IMHO.


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## dilbert789 (Apr 20, 2010)

steve41 said:


> My view is that the proper approach to this issue is to start with the basics..... your age , gross salary, planned retirement age, loans and the current size of your nest egg... preferably differentiated by type (reg/nonreg/tfsa/realestate) and split by spouse.
> 
> Then you will be in a position to determine your spending/lifestyle. If you are just starting out, it is entirely possible that you might not need to be saving much, if anything. Or the reverse could be true.
> 
> ...


I feel the same, however in terms of the original concept behind this thread was to get an idea where I stand on specific spending items as compared to others. If I'm spending $360 on groceries a month but the common seems to be closer to $200, it should through a red flag as a good area to possibly trim back a bit.


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## MoneyGal (Apr 24, 2009)

But doesn't that assume the same level of resources? Someone spending $200/month on cellphones and Internet (for example) with an after-tax income of $45,000 (for example) is in a very different position than you are. 

Even food costs - which may sound relatively fixed - can vary tremendously depending on how many people you are feeding, whether you are including all meals, whether meals are made in the home or not, whether someone has particular dietary tastes or preferences, etc. 

(I know you know this; I'm not trying to be ... what is that word? pedantic, or patronizing.) 

Elizabeth Warren - a smart cookie if there ever was one - wrote a book on personal finance with her daughter, called All Your Worth. (This is a follow-up to their earlier book, The Two-Income Trap.)

In _All Your Worth_, Warren and her co-author daughter provide a simple metric for understanding how to measure your spending against your current and future needs. (Their reasoning is quite similar to the field of lifecycle economics, which is one of my areas of interest.) In a nutshell: they believe you should spend no more than 50% of your household income on essentials, you should save 20%, and the remaining 30% can be spent on non-essential items. There's much more to it, but their argument is very simple and compelling - and there's no need to compare your spending against anyone else's. 

Anyways. Another library recommendation.


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## MoneyGal (Apr 24, 2009)

But honestly: what I want to know is what everybody does to have household incomes (or even individual incomes) over $100K! That's an astoundingly small sliver of the Canadian population. Perhaps this site just aggregates that population effectively?


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## dilbert789 (Apr 20, 2010)

MoneyGal said:


> But honestly: what I want to know is what everybody does to have household incomes (or even individual incomes) over $100K! That's an astoundingly small sliver of the Canadian population. Perhaps this site just aggregates that population effectively?


I would agree with your aggregate theory. 
My addition: Lower incomes may not feel they have the capacity to save or invest and therefore never find the forum as they don't care to look.


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## brad (May 22, 2009)

MoneyGal said:


> That's an astoundingly small sliver of the Canadian population. Perhaps this site just aggregates that population effectively?


I think most people become focused on money in two situations: 1) when they don't have enough, and 2) when they have more than they need. So probably this forum is missing the silent majority of people who are aren't suffering but don't have a lot left over either.


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## steve41 (Apr 18, 2009)

I guess. My feeling is that everyone is different. Who cares whether you spend 50% of your paycheck on designer drugs, caviar or give it to charity? It is the total amount of after tax/after inflation spending which concerns me, not the discrete allocation.


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## brad (May 22, 2009)

MoneyGal said:


> In a nutshell: they believe you should spend no more than 50% of your household income on essentials, you should save 20%, and the remaining 30% can be spent on non-essential items.


I still think percentage-based rules of thumb only work for a certain income range. If you're earning $10K/year you're probably spending way more than 50% of your household income on essentials and probably saving close to 0%. If you earn $1 million/year and you're spending 50% of your household income on essentials, then your definition of essentials probably encompasses things like caviar and rare bottles of wine.


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## the-royal-mail (Dec 11, 2009)

dilbert789 said:


> I feel the same, however in terms of the original concept behind this thread was to get an idea where I stand on specific spending items as compared to others. If I'm spending $360 on groceries a month but the common seems to be closer to $200, it should through a red flag as a good area to possibly trim back a bit.


I did provide this type of feedback.


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## MoneyGal (Apr 24, 2009)

Brad - yes. This is why I think you need to marry (something like) Warren's work with lifecycle economics, particularly the idea of smoothing consumption over your lifetime. My go-to book for that concept is Kotlikoff's "Spend 'Til The End."


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## MoneyGal (Apr 24, 2009)

OK, new question, and back onto budgeting: how come I am not seeing gym memberships in peoples' monthly spending? Is it because the original poster didn't ask, or is it that few people have gym memberships? 

I spend $125/month on my membership in a local martial arts club. I've also been a member at the athletic facility on the university campus where I work, which can add another $40/month.


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## dilbert789 (Apr 20, 2010)

the-royal-mail said:


> I did provide this type of feedback.


And I hadn't quoted you.  Thanks for the feedback!


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## brad (May 22, 2009)

MoneyGal said:


> Is it because the original poster didn't ask, or is it that few people have gym memberships?


It's probably a combination of those two factors; there are certainly lots of categories that could be included in a budget.

I bought a Concept 2 indoor rower in 2004 that I use as my gym; spread over the 6 years I've owned it the cost comes out to $14/month so far. But I bought my touring bike the same year and I use that for exercise as well, so that probably adds another $14/month or so on top of it.

I treat exercise as an essential, but it's definitely one where cost savings are possible depending on the type of exercise you like to do and the amount of equipment and/or training necessary.


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## jamesbe (May 8, 2010)

Okay I made that comment in the other thread I have my numbers at home on my computer. Here are my expenses from memory.

Mortgage $1800 a month (this a 13 year amortization now since I'm paying a lot more down than I need to).
Taxes $350
Insurance (2 cars + house) $160
Life insurance $130
Phone/TV/Internet $130
Food $400
Gas $150
Utilities $300 (this is a high estimate actually)
Misc $200
About $3630

Monthly income is ~: 7500

That's 4k give or take depending on the month.

My net can vary depending on my expenses since I run my own business for half my income. This is purely based on my income, my wife makes some too but typically only enough for play money like $10k a year max, we don't use it for much but paying the utility bills once and awhile.


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## MoneyGal (Apr 24, 2009)

I have a fantastic stationary bike (and a great road bike too) but I belong to gyms etc. because, although I've tried, apparently I won't just pick up a kettlebell and swing it around for 7 minutes. Or do 30 burpees in a row.


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## steve41 (Apr 18, 2009)

OK.... I agree that salary/income level determines how things get allocated. Low wage earners will spend more proportionally on the basics, higher wage earners, more on luxuries; however, _where_ you are situated on the time scale makes a difference as well. 

The younger you are, the more you will be spending on house acquisition/mortgage paydown, child expenses, paying off student loans.... Those farther along will have excess cash which they can direct to savings. In fact, when you examine the numbers, your salary will generally increase at a greater rate than inflation, and so that excess cash will be far larger, proportionally, than when you are just starting out.

Rules of thumb that don't take into account age and income level aren't particularly useful.


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## brad (May 22, 2009)

jamesbe said:


> Monthly income is ~: 7500


I think this is the key -- unless you're in a particularly low-tax province, a monthly after-tax income of $7500 means you're earning quite a bit more than $100K, right? This might explain why it's easier for you to save what you save.


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## rookie (Mar 19, 2010)

my company reimburses 350$ per family member on annual gym membership and there is a small gym right next door that charges 250$. not a fancy one but very well serves my needs. after tax, its 0$ outgo for me


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## rookie (Mar 19, 2010)

MoneyGal said:


> But honestly: what I want to know is what everybody does to have household incomes (or even individual incomes) over $100K! That's an astoundingly small sliver of the Canadian population. Perhaps this site just aggregates that population effectively?


really?? 

how do i see so many fancy cars on the road and why do i see the GTA home prices going up, up and away??? so many other similar things that baffle me. fancy make-up products and prices, those ipads and video games, spas everywhere, people in the shopping malls all the time. always make me wonder where people are getting the kind of money they seem to be spending. are not people reporting their incomes correctly? or are they foolish enough to be throwing away all the money they are making hoping uncle sam is going to take care of them when they get old?


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## steve41 (Apr 18, 2009)

Extravagance.... spending $100 on a gym membership.
Thrift.... mowing your own lawn with a hand mower.

Normalcy (the Steve method).... having your lawn cut, and avoiding the gym.


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## HaroldCrump (Jun 10, 2009)

steve41 said:


> Thrift.... mowing your own lawn with a hand mower.


It is not (just) thrift.
It is also environment consciousness.
I see no reason to add to the pollution by using a gas or electric lawnmower, unless you have a farm-size lawn.
Every day, perfectly healthy and strong men and women burn thousands of cubic meters of gasoline or thousands of KW of electricity mowing pea-sized lawns and backyards.
The physical activity aspect of hand mowing is limited.
I don't think it burns more than a hundred or so cals, never measured it though.


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## MoneyGal (Apr 24, 2009)

No lawn.


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## jamesbe (May 8, 2010)

brad said:


> I think this is the key -- unless you're in a particularly low-tax province, a monthly after-tax income of $7500 means you're earning quite a bit more than $100K, right? This might explain why it's easier for you to save what you save.


$120k which is what I wrote in the original thread, didn't say anything about 100k


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## brad (May 22, 2009)

HaroldCrump said:


> I see no reason to add to the pollution by using a gas or electric lawnmower, unless you have a farm-size lawn.


When I lived in Vermont it took me an hour and 45 minutes to mow my lawn with a power mower. Then I switched to a human-powered reel mower and it actually took less time because I didn't have to stop to fill up the mower with gasoline halfway through. I felt more relaxed as well without the pounding roar of the mower in my ears. You can get modern reel mowers with four wheels instead of a roller in back, and I find them no harder to push than a regular power mower.

The only downside to a reel mower is that you have to be careful to not let the grass get too high, otherwise it just pushes the grass over instead of cutting it.


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## jamesbe (May 8, 2010)

brad said:


> When I lived in Vermont it took me an hour and 45 minutes to mow my lawn with a power mower. Then I switched to a human-powered reel mower and it actually took less time because I didn't have to stop to fill up the mower with gasoline halfway through. I felt more relaxed as well without the pounding roar of the mower in my ears. You can get modern reel mowers with four wheels instead of a roller in back, and I find them no harder to push than a regular power mower.
> 
> The only downside to a reel mower is that you have to be careful to not let the grass get too high, otherwise it just pushes the grass over instead of cutting it.


Totally off topic but 1 hour 45 min? I'd be using a riding lawnmower at that point


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## brad (May 22, 2009)

jamesbe said:


> Totally off topic but 1 hour 45 min? I'd be using a riding lawnmower at that point


When I was a kid, it was my job to mow our 3-acre lawn with a hand-pushed mower, which I did in stages, one parcel each afternoon when I got home from school. By the time I finished the last parcel it was time to start the first one again. After six years of mowing like that, 1.5 hours to mow a lawn seemed like a piece of cake!


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## Oldroe (Sep 18, 2009)

It's my personal goal to make lawn cutting socially irresponsible.


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## steve41 (Apr 18, 2009)

I agree. Concrete, asphalt and gravel.... Think of the unused parking revenue we are all sitting on!


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## Ihatetaxes (May 5, 2010)

I use a reel mower and my household income is around $35k/month. Some of my expenses:

Bell gets about $300 for satellite, 2 home phone lines, one cell and internet
Rogers gets $150 for my Blackberry
Utilities around $300 including pool which sucks the energy all summer
Car lease $950 (own the other car outright and I get a $1000/month car allowance)
Insurance for 2 cars and house around $300
Groceries around $700 (I like to cook and never look at prices of good food)
Travel average $1500/month (three trips totalling 5 weeks already this year)
Gifts for family and Friend's - around $500
Charity - around $500/month
Cleaning lady $180 (2 x $90 per month)
Pets $150 average for food and vet bills (last months was $400 for heart worm and shots)
Mortgage $2500 but will be paid off this year
RRSPs and RESP $4500

Generally lots left over that gets put away or lumps against the mortgage. I don't think we live a lavish lifestyle considering our income. I am also debt adverse and other than the almost gone mortgage and car lease we have zero debt.


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## Sampson (Apr 3, 2009)

I'm with steve41 on this one. As long as all the obligations are met, and long term savings goals are on track, then who cares what or how much is spent where. I make sure we enjoy our current lives, but have enough for the future too. Everything else goes to booze, women and gambling 

Maybe it's time for another anonymous poll, this one with household incomes.

No lawn here either. And I can bike to work for exercise, and take advantage of the $20/year gym.


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## HaroldCrump (Jun 10, 2009)

Ihatetaxes said:


> my household income is around $35k/month


Two questions - what do you do and how do _I_ get in on the gig?


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## the-royal-mail (Dec 11, 2009)

Harold, I think you're talking to Kevin O'Leary.


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## Ihatetaxes (May 5, 2010)

HaroldCrump said:


> Two questions - what do you do and how do _I_ get in on the gig?


Find yourself a good job in sales that pays a commission directly related to your results. Don't take a salary or expenses ask for higher commission. Then work your *** off for 15 years combining natural sales acumen with hard work including 12 hour days plus a couple of hours every night working from home. After your client base is established and loyal to you, leave the employer and start your own business so now you are paying yourself. Combine that with a spouse who is also in sales and 11 years with her company as a top producer in Canada, 7 time President's Club winner.

For those stagnating in a low paying job my only advice is work harder if you feel there is a decent career path within your current place of employment, ask for advancement every chance you get and if this isn't working consider a change in career and also consider self employment.


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## rookie (Mar 19, 2010)

no wonder you hate taxes!!!


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## Square Root (Jan 30, 2010)

MoneyGal said:


> OK, new question, and back onto budgeting: how come I am not seeing gym memberships in peoples' monthly spending? Is it because the original poster didn't ask, or is it that few people have gym memberships?
> 
> I spend $125/month on my membership in a local martial arts club. I've also been a member at the athletic facility on the university campus where I work, which can add another $40/month.


We have budgetted $14k for our fitness and social clubs this year. This represents about 2% of our expenses. We would not be typical in this regard but have a very high priority on fitness activities.


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## dilbert789 (Apr 20, 2010)

Square Root said:


> We have budgetted $14k for our fitness and social clubs this year. This represents about 2% of our expenses. We would not be typical in this regard but have a very high priority on fitness activities.


I'm going to go out on a limb here and say you missed a decimal point and that should say 1.4k. OR you spend $700,000 a year on expenses...


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## Dr_V (Oct 27, 2009)

Very interesting replies, here. Thanks for this thread. It seems as though there is a good mix of families at all ranges of the income spectrum, so it's nice to see this kind of perspective.

My wife and I keep a very detailed budget (in Quicken). Posting all of the details here would be onerous, but I could give a couple of key examples. Without a doubt, our Quicken budget (which we reconcile to actual costs on a yearly basis, incidentally) has helped us to cut out a number of expenses that we deemed to be too high -- a symptom of "lifestyle inflation", I suppose. For example, 



We no longer have a cell phone plan (we try to keep our cell costs down to <= $10 by using pay-as-you-go phones).
We pay for basic cable ($29.99/mo), but "splurge" on TMN ($16.99/mo).
We've bought a number of things that are often rented in order to cut down on recurring monthly costs and save money in the long run (e.g., we bought an elliptical and cut out our gym membership; we bought our PVR and cut out the digital cable box rental; we bought a water heater to cut out its rental, and so on).
We eat well and healthily, and entertain guests regularly; our grocery bill is probably one of our highest "non-mortgage" items. It varies month-to-month, but our grocery bill (including diapers, pharmaceuticals, and the like) runs about $650/mo.

And of course, there are the regular "lifestyle" things (like, bringing your own lunch to work, not carrying debt, living frugally, and so on).


K.


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## brad (May 22, 2009)

As a Mac user in Canada, I'm ultra-marginalized when it comes to Quicken; the only truly Canadian version of Quicken is for Windows, and I've been running that for the past couple of years. But now that Quicken came out with its new "Quicken Essentials for Mac" I've switched to that because it saves me the hassle of rebooting my Mac into Windows or running a virtual machine every time I want to use Quicken.

While Quicken Essentials is very bare-bones, I find it meets my needs (in combination with Canadian Capitalist's brilliant Google Docs tool for tracking investments) and the budgeting feature is really quite useful.

I'm only tracking a few specific line items, and as you can see I'm over in most of them this month, but this shows you the graphic dashboard that Quicken provides when you open up the program:










I can also see at a glance how well I've stuck to my budgeted amount for an individual item over the past year:


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## Square Root (Jan 30, 2010)

dilbert789 said:


> I'm going to go out on a limb here and say you missed a decimal point and that should say 1.4k. OR you spend $700,000 a year on expenses...


Figures and decimals were posted correctly.


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## the-royal-mail (Dec 11, 2009)

Yikes. If I were to do up charts like that for my spending, I would have red bars on my pocket money as well as credit card. I waste money in these two avenues, usually 200-600 a month waste. I know I know. I've been aware of this for a long time. My only defence is that I am still able to meet all of my financial goals so this isn't causing problems. <flame proof suit on>


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## brad (May 22, 2009)

the-royal-mail said:


> Yikes. If I were to do up charts like that for my spending, I would have red bars on my pocket money as well as credit card.


The charts (which are automatically generated by Quicken based on my daily accounting) are really useful for identifying areas of "waste" or at least areas where you're spending more than you think is necessary. 

One of the items I'm tracking is "cash," which doesn't really say where that money is going (most of it goes for food, actually, but I don't track my cash expenses) -- I noticed in my last end-of-year report from Quicken that I spent a lot of cash in 2009 and I decided to first set myself a limit and then if I have trouble meeting it I'll start breaking down where that cash goes so I can control it further.

I use targeted budgeting as a way to try to keep a lid on specific expenses that have gotten out of hand in the past. I look at my end-of-year category report and if anything makes me say "I can't believe I spent that much on xyz!" it goes into my budget.


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## Ben (Apr 3, 2009)

I am on track to spend $4,000 per month this year. This "spending" is inflated a bit because about the mortgage is accelerated, with 75% of payment going to principle right now.

Some other notes: 
$350 groceries
$175 utilities
$67 phone/internet (no cable)
$200 gas
$100 restaurant
No car payments (paid)

Question: do you use a budget, track income/expenses, or use a combination of both? I do a bit of a both, with an annual projection in December, then tracking actual spending against that projection (Excel).


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## dilbert789 (Apr 20, 2010)

Ben said:


> Question: do you use a budget, track income/expenses, or use a combination of both? I do a bit of a both, with an annual projection in December, then tracking actual spending against that projection (Excel).



I've been using Mint.com as it works with PC financial (if you say you live in the US...) for the last couple of months. The problem that I've now found is that there are too many categories that I'm trying to track and it starts to become confusing and overwhelming when you have 15 categories saying you are over budget. I think I'm going to trim it down to maybe 6 categories or so to make it more usable.


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## Square Root (Jan 30, 2010)

We track and budget 46 expense categories and 5 income categories monthly on an excel spreadsheet. Current year plus 2 future years. Have done this for 20 years. Some form of this is really important if you want to get control of your finances.


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## steve41 (Apr 18, 2009)

Jesus SR. You net $700K a year, and you spend time futzing around with spreadsheets to track your expenses? If I made that much, I would have my own personal accountant (in addition to a butler, chauffeur....) to track this stuff for me. What gives?


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## Square Root (Jan 30, 2010)

Get a grip Steve. $1million a year isn't as much as you think. I enjoy this kind of thing. Besides with a CA, MBA, CFA who would be more qualified than I to do this? Manage my own portfolio too.


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## the-royal-mail (Dec 11, 2009)

Yeah I agree. Even if you have more money than you know what to do with you should still manage it properly. We all have the mindset that if we won the lottery we wouldn't have a care in the world and would give away a million here, a million there, willy nilly. This attitude is precisely what causes a high percentage of jackpot winners to run out of money in a very short time.


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## Ben (Apr 3, 2009)

Square Root said:


> We track and budget 46 expense categories and 5 income categories monthly on an excel spreadsheet. Current year plus 2 future years. Have done this for 20 years. Some form of this is really important if you want to get control of your finances.


We have 14 expense and 3 income categories. Having fewer categories simplifies the accounting, but some degree of budget control is sacrified. The "Other Expense" spending tends to be fairly large, and it's hard to tighten spending in that category when it's so nebulous. On the other hand, we tend to spend consciously as opposed to frivolously, so I don't think we'd find too much leakage to plug.

Recently I have started to play with 2 future years as well, and I think that'll be fun and valuable to build into the spreadsheet. Things are no longer as predictable now that there's a wee one in the house, and it's nice to peer into the future and see that cashflow will still be manageable during a clutch of maternity leaves. It is motivating to see where the bar will be set for net worth in future too.


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## randomthoughts (May 23, 2010)

I track just 6 primary categories (eg. fun) and sub categories (eg. movie). Budgeting is only done on the primary category. If a primary category is getting out of control, analysis can be done on the sub-category.

Yearly expenses are subtracted 'off the top' and aren't included in monthly budgeting.

The biggest objection that I have with most budgets I see is that dining out is included in Food. Dining should be categorized as Fun, which is really 'discretionary spending'.

Groceries (anything bought in grocery, primarily food) $150
Datacom (phone, tv, internet) $79
Fun (dining, toys, gifts, clothes) $220
Utilities $150 (lower in summer, higher in winter)
Auto (gas, maintenance) $80
Mortgage (doubled payments) $1600
Other (yearly expenses) $0, just used for tracking

Income: $4k net


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## steve41 (Apr 18, 2009)

I didn't mean to denigrate your process of tracking expenses.... I don't, but many individuals do.

I would hope that individuals would spend time on the more important issues such as "Am I spending too much?, or are my undeserving kids going to inherit a gazillion dollars? .... namely, looking at the totality of the financial planning process such as "what is the optimum level of spending (pre/post retirement, lump sum needs, charitable giving...) which will ensure a comfortable lifestyle throughout the next 30-40-50 years and/or deliver a desired estate on death. The issues of taxation, inflation, real estate, loans, salary cessation (retirement), entitlements... obviously, being an integral part of the analysis.

I simply don't see the need to itemize how that lifestyle breaks down into its constituent parts. I have neither a CA nor a CFA, so I don't feel qualified to make a judgement, but I am still curious.


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## Square Root (Jan 30, 2010)

I can confirm that all the important items you mentioned are part of our long term planning process. However, you still need to know how much you spend. Agree it doesn't have to be in a lot of detail. But if issues arise detail may help. Also, if you have lumpy income or expenses over a number of years detail helps. I think more than anything our detail plans have been most useful in planning cash flows, rather than expense control.


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## Square Root (Jan 30, 2010)

randomthoughts said:


> I track just 6 primary categories (eg. fun) and sub categories (eg. movie). Budgeting is only done on the primary category. If a primary category is getting out of control, analysis can be done on the sub-category.
> 
> Yearly expenses are subtracted 'off the top' and aren't included in monthly budgeting.
> 
> ...


I think you are on the right track. We lump a lot of stuff into a category called "cash". These are things that don't change much from month to month(groceries, liquor, cleaning ladies, taxies, other cash expenses). Eating out is under category "Entertainment". separate categories for: clothing, various clubs, auto (Ontario & Alberta), donations, gifts, lawyers (mostly zero now), professional dues, credit card fees (not interest), 5-6 categories for each of our 3 properties, 4 categories for travel (biggest discretionary expense),medical, technology (internet,cell,satellite, phone, etc-Ont & Alb). On the income side-pension,dividends, interest, other incentive awards. I include income taxes payments in income as they are usually refunds. Income is otherwise treated net of withholdings. Obviously our lives are pretty complicated and our tracking system reflects this. The simpler you life the simpler the budget system can be. I can't emphasize enough how important this system has been in helping us reach financial independence over a long very volatile period.


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## Addy (Mar 12, 2010)

MoneyGal said:


> OK, new question, and back onto budgeting: how come I am not seeing gym memberships in peoples' monthly spending? Is it because the original poster didn't ask, or is it that few people have gym memberships?
> 
> I spend $125/month on my membership in a local martial arts club. I've also been a member at the athletic facility on the university campus where I work, which can add another $40/month.



I work out on my lunch hour (so I don't have to hire a sitter), at my workplace which has a kick-*** gym - brand spanking new... and only $8.50 biweekly.... it comes off my pay so I just include it in my deductions to determine my net pay. It's one of the reasons I work where I do actually!

There are a lot of categories that aren't listed in this thread that we track, but maybe it's because everyone thinks differently or has different needs so some expenses may remain hidden. For instance, since we don't use our car very much, we have both an automobile expense section and a bicycle expense section


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## Addy (Mar 12, 2010)

Square Root said:


> We track and budget 46 expense categories and 5 income categories monthly on an excel spreadsheet. Current year plus 2 future years. Have done this for 20 years. Some form of this is really important if you want to get control of your finances.


That is so cool! We do the same thing.. we have ours set up to actually allocate our savings towards specific future purchases (ie saving for a new car or computer so we can pay with cash - even saving for next years property taxes and auto insurance so we don't have insurance on a payment plan). We've done this for about 8 or 9 years now, 20 is awesome! 

I'd love to see a template of your sheet if you don't mind posting somewhere? It may give us some ideas we've missed.


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## Addy (Mar 12, 2010)

Square Root said:


> I can confirm that all the important items you mentioned are part of our long term planning process. However, you still need to know how much you spend. Agree it doesn't have to be in a lot of detail. But if issues arise detail may help. Also, if you have lumpy income or expenses over a number of years detail helps. I think more than anything our detail plans have been most useful in planning cash flows, rather than expense control.


I can attest to the wiseness behind this. My husband and I decided (before we got out act together and had 10K in consumer debt) to track our expenses for three months. We were certain, POSITIVE, we were not overspending. One month of tracking our expenses without making any changes sure humbled us! We were spending absolutely ridiculous amounts of money - it was shameful.

After the first month we did not wait another two months... we changed our budget there and then, paid off the debt in one year and now live happily debt free. Zero mortgage, zero consumer debt. Without tracking, our expenses would get out of control without us realizing it.


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## the-royal-mail (Dec 11, 2009)

Addy said:


> ... (ie saving for a new car or computer so we can pay with cash - even saving for next years property taxes and auto insurance so we don't have insurance on a payment plan).


Wow, I never knew such a person existed (other than me). Good job.

Payment plans ("for just one low monthly payment of $x" whatever) suck you dry. Calculate what these make the item cost at the end of the day and you find that monthly payments are no option.

Plus many of them demand access to take the money right out of your bank account.

Not me. My LL approached me on Friday and said "They are really pushing for everyone to be on pre-authorized payments"...nope. I don't do that for anyone.

I know I'm preaching to the choir here addy but I've said it a number of times here before: just because you CAN do something, doesn't mean you SHOULD.

Well done - glad to see someone who can budget and save.


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## brad (May 22, 2009)

the-royal-mail said:


> just because you CAN do something, doesn't mean you SHOULD.


This also applies to budgeting ;-)

While managing my finances is important to me, it's about 20th on my list of priorities in life and I don't want to spend more time on it than necessary. So while I account for all my income and expenses, and have a bunch of expense categories (maybe not 46, but probably at least 25), I establish budgets only for the half-dozen or so line items that are troublemakers.

I see no need to "budget" and track my performance against budget for items over which I have little or no control. Why set up a budgeted amount for heating costs, for example, when heating costs are determined in large part by the weather? If I think I'm spending too much on heating, it's time to look into improving insulation or putting plastic over the windows in winter. But I'm not going to budget for it because any target amount I set would be arbitrary, and if I go overbudget it's probably due largely to factors beyond my control.

I treat managing my expenses as a three-step process: 1) documentation, 2) review, and 3) correction. The "documentation" stage involves accounting: I enter all my income and expenses in Quicken; this is a daily ritual. Step 2 ("review") happens quarterly: I run a report of my expenses and review them for any red flags. If there are any, then I go to step 3, and that's where I apply a budget. If I've been spending more on a particular item than I think I should, I set a budget cap on that item and start tracking my performance each month against that cap.

I find sticking to a budget is much more manageable if I only am tracking a handful of line items to a budget. Otherwise it starts taking time and becomes onerous, which makes it less likely that I'll do it.

But everyone's different -- I just think it's important to recognize that a wide range of approaches to budgeting can be effective.


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## steve41 (Apr 18, 2009)

The "Steve method".... buy everything on plastic and pay off your credit card balance every month. Let your cc stmt be your expense record. Only write checks with stubs, so you will have a record. I can see I am alone in this, but what the heck.


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## Addy (Mar 12, 2010)

I agree budgeting isn't for everyone, but there are advantages. For Brad's remark about having little control over heat, that is true (for the most part), but part of budgeting your expenses is also budgeting and ensuring, or at least help to ensure, your savings are also planned for. For us, we figure out what our expenses are (fixed first, then variable) which in turn gives us a good idea how much we can save. I keep hearing the old addage "pay yourself first", but, at least for us, without knowing what our expenses will be, we have difficulty know if we can save 10% or 50% of our income. I'm a bit jealous of people who don't budget and can make it work, as budgeting and tracking expenses takes time, but on the other hand I get a kick out of being able to track with certainty how much our insurance has gone up (or down), how much we have put into home renovations, etc.



steve41 said:


> The "Steve method".... buy everything on plastic and pay off your credit card balance every month. Let your cc stmt be your expense record. Only write checks with stubs, so you will have a record. I can see I am alone in this, but what the heck.


We put as much as possible on plastic, and also pay it off every month. The cc statement is a big part of tracking our expenses (and get free travel money  ) But there are many stores which do not take credit cards, and I like to buy second hand as often as possible (ie garage sales for my 3 yr olds games.... I'd rather pay $1 cash than $19.99 plus taxes in store!), patio furniture, furniture, etc. So for us (and I stress the for us part, it doesn't work for everyone) budgeting and tracking our expenses takes a bit of work, but it gives us a ethereal sense of ... not sure how to say it... peace of mind perhaps.


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## Square Root (Jan 30, 2010)

Another important aspect of our budgetting system is the balancing of "opening cash', "income", "expenses", and "ending cash". Opening cash plus income less expenses must equal ending cash each month. This is the control that ensures we don't miss any thing. Cash is defined as chequing account plus all our savings accounts. This is what I meant by cash flow planning. If the cash balance gets too high I transfer cash to our investment account which is outside the definition of cash. Both my wife and I are accountants (obviously).


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## the-royal-mail (Dec 11, 2009)

The last few posts have been excellent. What a blessing to be among such well-informed and intelligent posters. I obviously agree with what has been written. Good stuff by all.


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## stephenheath (Apr 3, 2009)

This has been an exceptionally interesting thread. On the original point, I've also heard people saying they save 4-5k a month on 100k income, but the ones I have talked to who said that indicated that they count debt reduction as savings. Which makes sense if you are working on a "net worth" basis. Paying down 5k of principal or putting 5k into an investment both increases your net worth by the same amount.


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## ShowMeTheMoney (Apr 12, 2009)

I use the "Steve" method, put everything on cc that gets paid in full each month an track everything with Quicken, but I only do this every couple of weeks, not daily. However I also have a speadsheet I use to determine how much I can save every month. I have a budget, so I know generally how much I spend on essentials, but I need to know exactly on a biweekly basis how much of my paycheque I can put away for savings and what I need to keep in my checking account to pay for stuff. And I keep track of those savings so I know I want to max out rrsp and tfsa in January, the pay down mortgage debt, pay for a vacation in July etc. This is cash-flow planning.

Bills, expenses, savings and income don't always come nicely evened out on a monthly basis. For example I get paid more in the second half of the year due to maxing out cpp and ei contributions, hydro is paid every other month, property taxes over 11 months, water/sewage every 6 months, life insurance once a year, Christmas gifts once a year etc.. etc..

So I have an excel spreadsheet, that tracks what I foresee coming in and out of every paycheque given all these schedules, so I can track how much I'll transfer to savings and from there what I'll do with those savings. I have very few categories on that spreadsheet, for example Credit Card, is one of them, I know I generally put about 1500$/month on that (groceries, household stuff, and whatever I need for myself and family that month, gardening clothes) so that's what I plan, I'm pretty good at sticking to about that and I adjust as necessary when the bill is due. If other exceptional stuff like extra for vacation or Christmas gifts is put on cc, I might give it separate category in Other anyway as way to budget and track. But since this is more an in/out tracking I have very few categories, essentially Utilities, Insurance, Mortgage, Property taxes, Cash (lunches and housekeeper mostly), Credit Card, Other (specified). I then have total In, total Out and difference, which if positive let me know what I can put in savings (or pull out if negative, but that very rarely happens). I also in that spreadsheet keep track of the savings account and where I want to allocate the funds and when (rrsp, tfsa, extra mortage payments, investments). So the speasheet has about a year planning in advance.

This spreadsheet help me to track and plan and budget for when things will be due so I can pay them out of my chequing account, and determine how much I can transfer to savings. I like Quicken because it keeps track of my investments and balances, and because I put as much as I can on my credit card, that's where I can keep track of where the money actually goes. But although Quicken will tell me how much money I can save overall in a year, I don't think it can tell me exactly how much I can or should transfer to saving today, so I use the spreadsheet for that. It's been active for the last 4 years and has really been great in keeping my finances in order on a day to day so I never pay interest charges, I'm always above the minimum to not have fees on my chequing, and maximize the interest I get on money not spent while it's waiting to be invested to pay down the mortgage.


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## steve41 (Apr 18, 2009)

the-royal-mail said:


> The last few posts have been excellent. What a blessing to be among such well-informed and intelligent posters. I obviously agree with what has been written. Good stuff by all.


"Well-informed and intelligent"? You missed "anal". (Sorry... I simply couldn't pass that one up)


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## Addy (Mar 12, 2010)

steve41 said:


> "Well-informed and intelligent"? You missed "anal". (Sorry... I simply couldn't pass that one up)


There's truth to jokes like this, since it means you related the word anal to those posts, one of which was my post. I'm sorry you consider my way of tracking expenses anal; I tried my best to not belittle your way of tracking expenses, even pointing out that I too use cc statements to track.


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## Square Root (Jan 30, 2010)

Well' I'm glad some appreciate the posts. Again, I am convinced some reasonable form of expense/income tracking/budgetting is worthwhile if not essential. It helped me retire at 56 with 7 figure retirement income and 8 figure portfolio. If you are on track with your long term financial goals great. Keep it up. If not consider something along the lines described above.


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## MoneyGal (Apr 24, 2009)

ISTM that one cannot simultaneously successfully argue that tracking expenses carefully is "anal" and also that (from another thread) "Cash flow planning isn't something you can address in a book or a set of tables... you need to address the math programmatically."


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## ShowMeTheMoney (Apr 12, 2009)

Knowing I'm in control of my finances gives me peace of mind, and allows me to enjoy the spending I do without guilt or worry, and it gives me satisfaction to see myself get closer keeps my long term goals. It's not about anally keeping track of every penny and stessing about it. Having a budget is actually quite liberating. Not having a clue or a plan for my hard earned money is what would be stressful for me and that would make me pretty anal.


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## brad (May 22, 2009)

Years ago I had some t-shirts made up that said "Proud to Be Anal." I'll have to see if I have any left. Being anal is a feature, not a bug.


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## steve41 (Apr 18, 2009)

Look, I am continually tarred with the 'anal' brush as well, so I speak from experience. My software agonizes over tax accuracy, tax as it interacts with various investment types, the 'reverse tax' math, and the effect of tax out in time.

Most software avoids this 'anality' and either treat tax as an approximated average or marginal rate. Skeptics poo poo my `needs driven` obsession with a simplistic... "Hey, who knows what taxes will do over time... your tax accurate approach is silly."

The only point I was making was that lifestyle or aftertax spending doesn't care whether it is directed to buying expensive designer clothing or Value Village duds.... it is all paid for with the same dollar.

In all the years I have been selling the program, I can count on the fingers of one hand the number of requests for me to include an expense detail breakdown. (BTW, I have quite a few accountants as users as well)


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## the-royal-mail (Dec 11, 2009)

There are a lot of top notch money managers in this forum. The main thing is to have a plan and if that makes us anal, so be it. I wouldn't say steve41 was belittling anything. I saw it as humour and I got a good laugh out of the comment. Sometimes it's good to laugh.


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## investnoob (Jun 29, 2009)

I use kind of a "reverse-budget."

I know what my net pay is every month and what my expenditures will be in most major categories. In my "mental accounting" I include "savings" as an "expenditure."

So, my budget looks something like this:

Housing = 34% net pay
(Mtg, prop taxes, insurance)

Savings = 25-30% net pay

Utilities = 9% net pay
(gas, hydro, cable, internet, phone, cell)

This leaves about 27 to 32% for everything else. I don't track this stuff. I will use it for groceries, going out, vacation, books, entertainment, clothes, dvds etc...whatever.

Sometimes a major purchase will come out of the "savings" pot. Say, a new stove or major appliance.

If I feel like putting more in the savings pot, then I will tighten up the stuff I don't typically track. This works really well for me. I'm not the most disciplined "budgeter" so treating "savings" as an "expenditure" has really helped me put aside money.


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## michika (Apr 20, 2009)

I over budget and am completely ok with this.

We have a monthly budget like most everyone else. Although instead of fixed and variable as the only categories I have two additional sections; future/upcoming, and a Get Out fund.

Like others have mentioned I also don't like to have too many regularly monthly payments, and I certainly am against anyone having access to my bank account. I save up ahead of time and pay out our insurance, and other such annual bills in one-time lump sums.

The Get Out fund is cash I've put away above and beyond regular savings and an emergency fund. Its intended to cover me in the case I have a contract lapse, or a period of time between the end of a current job to the start of a new one. Even though I do work full time I'm not eligible for any benefits being a contractor.

Bottom line my plan is pay my savings, pay the bills, buy groceries, anything left is fair game.


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## randomthoughts (May 23, 2010)

Square Root: Because of my desire for simplicity/accountability, all cash spending gets attributed to my Fun category. 

I have 2 goals: track everything, write nothing down. In other words, there has to be an electronic data source for everything (so I use CC for most spending, and e-bank-statements for the cash withdrawals).

That being said, I'm not overly strict about the budget. Once or twice a month is sufficient for me. Yes, some months are over, but my expenses are so low that there's a silly amount of excess every month (that generally gets put to the mortgage yearly... which won't be an option next year, being paid off) or savings.

For big ticket items, I set aside a fund: any unspent budget plus 1/4 of any extra earnings gets tracked on an on-going basis. This is money that I can use to spend on extravagant things. This way, I really focus on enjoying the money spent... rather than frittering it away on fast food, I'll go for a REALLY nice meal. Or a nice toy.


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## Square Root (Jan 30, 2010)

Random Thoughts: Sounds like your system works well for you. There are probably as many "systems" as there are people using them. Important part is having some system- doesn't matter how much or how little you spend. This is a life skill that matters in the long run. Just help started my 26 year old daughter on her "system". She has pretty well developed financial goals and this should help her reach them. Hope she sticks to it.


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## Single Mom Rich Mom (Jul 2, 2010)

I'm like investnoob, when I was saving for retirement, I didn't track everything individually at all. I already know that I don't like eating fast food, my grocery budget is moderately lean ($375 for 3 of us plus a 100 pound dog), I like going out for drinks or dinner about once or twice a month, I have a tendency to spend too much on books or on holiday so have to watch myself so allow myself about one book purchase per month and just bring a predetermined cash amount when on holiday and don't spend over that... Everything else just is what it is and I don't like shopping anymore so it works. 

The best method that worked for me was just to live on one paycheck per month and save the other one - automatic 50% savings. Then when I got a second job doing consulting work, I just banked the whole thing into savings and only took out money for one trip a year and some long overdue house renovation.

My method's going to have to change given that I won't be working for the rest of the year, hopefully permanently if the market smartens up. I'm planning on keeping about a year's worth of expenses (estimated at 3-4% SWR) in a high  interest savings account, moving 1/12 of it over once a month to my chequing account and just spending within that limit. If my SWR turns out to be less than what I know I want to spend in a year, then I'll get my butt into a short term job ASAP.

I'm not sure if I should be switching to just spending cash (give myself an allowance every week) or sticking with the credit card for everything and monitoring the net difference between my cc and chequing account to see if I should be cutting back on discretionary stuff or not. And knowing that I tend to be an accumulator these days (didn't used to be), I'll probably be driven to see one month extra in there as a cushion.  I really like the new RBC myexpensetracker so am leaning towards using the credit card for everything and just paying it off every week.


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## celishave (May 8, 2010)

I don't have a budget perse but I do track my spending at the end of each month (bank statement dump into Excel once a month) and I generally spend the same amount each month on variable expenses give or take 15%. I have done this for three years. There are of course months where there are one time expenses but generally I've been lucky the last few years that i haven't had too many of those. Each year I try to guesstimate my income and expenses to see how much I will be able to save and I do an estimate for those one time costs as well. 

I am one of those people that do save 5K+ on a 100K income. My take home each month is 7500 (actually it is 6500 but 1000 goes to RRSP via work contributions and employer matching so it comes right off my take home - it's still being saved though). Here are my variable recurring expenses. BTW I'm early thirties, no kids which I know make a huge difference in costs.

Mortgage - 0 (paid off last year)
Property tax - 222
Utilities - 225 (Edmonton - very cold + inefficient heater)
Groceries/Toiletries - 350
Eating out - 130
Entertainment - 130 (movies, night out for drinks, books etc)
Vacation - 125 (take one vacation a year, usually around $1500 all inclusive type thing or trip to Vegas)
Recurring auto - 140 (this is gas and 3 oil changes a year, not any repairs which I mention below)
Home repairs - 50 (this is only the small stuff that comes up from time to time - nails, mowing lawn, etc)
Pet - 15 (food/litter for cat)
Clothes+drycleaning - 40 (I try to dryel rather than dryclean and only buy clothes 2-3 times per year on sales)
Gifts - 50 
Cable/internet/phone - 160 (trying to get this down)
Insurance - 118 (home and auto....auto has no collision coverage)
Golf - 75 (summer only and usually play 2 rounds a month at most)
Haircut - 20

This lets me save about 5550-6000 a month as there are months where I spend less than $1300. Dividend income brings in about another 8000 a year for me. My goal is to save $100,000 a year via dividends, savings and capital appreciation. The last couple of years, the "capital appreciation" part hasn't worked out so well for me....lol. I hope to retire between 42 - 45 or at the very least move to part time work.

Other costs that i know exist, but not on a month to month basis include large home repairs with I figure will average $2500 a year over a 25 year period and auto of $2500 a year also (assume purchase of one used car every 10 years + repairs out of warranty).


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## m3s (Apr 3, 2010)

I didn't read the whole thread as I've been off the site for about a month

I have been "saving" $3-4k per month consistently for the past 2 years on $70k so I imagine $4-5k on $100k is quite doable

https://www.networthiq.com/people/mode3sour

My YTD averages from Quicken

Car $100
Clothing $50
Entertainment $200
Groceries $250
Mortgage $750
Property Tax $150
Insurance $100
Internet/iPhone $80
Motorcycle $250
Utilities $100
Charity $50

Of course with net worth a few additional things go towards "savings" such as part of the mortgage payment and employer contributions to retirement.

If I subtract my average spending from my pay I'm left with about $1.5k/month


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## osc (Oct 17, 2009)

mortgage + property tax $2000
rrsp/tfsa $2500
non-registered $2000
gas $250
car insurance $75
groceries $750
internet/phones/tv $180
utilities $300
misc (clothes, gifts, etc) $200
electronics $200
home maintenance/furniture $200
vacation $1000


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## bernabee (Jul 5, 2010)

House Income after tax (2 ppl) about 9K

Mortgage and Prop tax - $1900
Utils - $260 (incls hydro, gas, phone/int/tv package)
Home insurance - $110
Car insurance - $239 (2 cars, no car payments)
Gas/Car Maintenance/Bus/Parking - $530
1 cell phone - $42

Groceries & Personal Care - $680 (incls haircuts, toilet paper, soap etc..)
Cat - $20/month

Restaurants - $190
Clothes - $175

Entertainment and Gifts - $425 (incls gym, yoga, movies, climbing, all activity related gear purchases, bday gifts, xmas, weddings, concerts, admissions to festivals etc..)

Vacation - $285 or approx $3500 per year for two ppl
Cash - $100 (untracked carefee spending)
Life - $350 (home and yard, small appliances, charity, decor, etc..)

Total $5300, savings $3700

These are our budget categories and upper limits. Most months we are below, or try to be below the amounts listed. All additional funds are fed into rrsps, tfsas and emergency fund for large purchases like tv, new roof, appliances etc..

This also represents about 10 years of lifestyle inflation due to pay increases, promotions etc.. When our household income was about 6k/month, we rented a 1bd for 750$/month incl heat. Moving up to a house has dramatically increased our costs.

I'd like to see someone's budget for a family with kids, ie childcare, or other kids costs as our clocks are ticking.

Original Poster - Do you not buy things like clothes? Entertainment? 

Our grocery costs seem high, however it's because we buy chicken, eggs, beef and pork from small farms, more-humanely raised animals. I'm happy to pay the extra.

Auto costs are high but the cars are old and require more servicing now, plus gas is effing expensive. 

Can anyone suggest what we might want to budget for baby->toddler->school-age->can i borrow your car dad?


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## SicknTired (Jul 5, 2010)

*Far from 4k savings.*

House income after tax - 6300

Mortgage & property tax - $1400
Utilities (heat,water,elec) - $280

Car payment - $375 
Car & House & Life Insurance - $200

Car Maintenance - $55 

Cable, Phone (home & 2 cells), internet - $133

Groceries - $600
Restaurants - $200
Fuel - $400
Child care - $650

But that leaves out gifts, haircare, sitter and spending money.

Total 4293

Which leaves about 2000 for saving.


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## dilbert789 (Apr 20, 2010)

celishave said:


> I am one of those people that do save 5K+ on a 100K income. My take home each month is 7500 (actually it is 6500 but 1000 goes to RRSP via work contributions and employer matching so it comes right off my take home - it's still being saved though).


Either your after tax income is close to 100k or you have some wicked way to not pay income tax. 7500 * 12 = $90,000 so you only pay $10k in tax a year?! 100k before taxes and 100k after taxes are a huge difference.


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## celishave (May 8, 2010)

dilbert789 said:


> Either your after tax income is close to 100k or you have some wicked way to not pay income tax. 7500 * 12 = $90,000 so you only pay $10k in tax a year?! 100k before taxes and 100k after taxes are a huge difference.


Well I make abit more than that. I'm around 130K. I say around because it depends on the bonus I get which can be between 1 and 12% of base (usually 5% though). Also the 7500 I clear is after I max out cpp/ei in around May or so.


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## dilbert789 (Apr 20, 2010)

celishave said:


> Well I make abit more than that. I'm around 130K. I say around because it depends on the bonus I get which can be between 1 and 12% of base (usually 5% though). Also the 7500 I clear is after I max out cpp/ei in around May or so.


Well saying you make 100k and 130k is quite a difference. Some people live on 30k. I say this just because again the ability to put $5000/month to savings/investments on a $100k income gets tossed around here quite a bit and I don't think is all that realistic, at least if you have a mortgage. However if you increase your income by a couple grand or so a month it starts to become quite possible.


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## mogul777 (Jun 2, 2009)

dilbert789 said:


> Well saying you make 100k and 130k is quite a difference. Some people live on 30k. I say this just because again the ability to put $5000/month to savings/investments on a $100k income gets tossed around here quite a bit and I don't think is all that realistic, at least if you have a mortgage. However if you increase your income by a couple grand or so a month it starts to become quite possible.


So if you make 102k you're good to go, but 100k you're just skimming by??  What am I missing here. Also, if someone can live on 30k or less I'm sure someone making 130k can scrounge up 5k for the rainy day fund. If you can't than that mortgage has you stretched too thin. 

I haven't had to budget for a long time, but I certainly didn't grow up rich so I recall quite well the meaning of "making do".


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## HaroldCrump (Jun 10, 2009)

mogul777 said:


> So if you make 102k you're good to go, but 100k you're just skimming by??  What am I missing here.


dilbert789 meant 2K a month, so that's about 24K extra a year, pre-tax


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## brad (May 22, 2009)

The important thing to remember is that there are no universal standards and everyone's situation is unique. Some people take on commitments, make choices, or set goals that leave them with a lot more or less extra cash than others. Comparing the budgets of three different households, each with the same exact annual income, is not an apples-to-apples comparison despite the intuitive impression that it might be.


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## MoneyGal (Apr 24, 2009)

(I am sorry I do not know how to make this smaller!)


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## steve41 (Apr 18, 2009)

Budgeting is not financial planning. Planning is determining what the size of your annual/monthly budget (after tax/after inflation) should be in light of the major financial parameters in your life as they will occur over time.

Salary (pretax) being one, but current savings, loans, pension, future capital gains also.... Determine periodically what this expense (lifestyle spending level) should be based on certain retirement goals such as retirement age, estate goals (i.e. do you want to die broke or leave a specific estate)

Once you have determined the level of savings (or de-savings if you are retired) and the offsetting after tax spending, then start itemizing a budget. The latter is a bookkeeping exercise however, and is meaningless unless you know what that budget target is. 

My two cents.


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## kcowan (Jul 1, 2010)

steve41 said:


> ...Once you have determined the level of savings (or de-savings if you are retired) and the offsetting after tax spending, then start itemizing a budget. The latter is a bookkeeping exercise however, and is meaningless unless you know what that budget target is.


And then extrapolating the portfolio performance along with the budget out for 40 years will give you the basic elements of your financial plan. Without such a plan, budgetting is interesting but not enough.

Forecastig the effects of taxes is also a key element of such a plan.


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## mogul777 (Jun 2, 2009)

HaroldCrump said:


> dilbert789 meant 2K a month, so that's about 24K extra a year, pre-tax


Yes indeed, it does help to read all the words.


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## chilly (Apr 3, 2009)

bernabee said:


> I'd like to see someone's budget for a family with kids, ie childcare, or other kids costs as our clocks are ticking.
> (...)
> Can anyone suggest what we might want to budget for baby->toddler->school-age->can i borrow your car dad?


Excellent suggestion. I'd love to see that too. 

I'll add my 2 cents when I get home, but having a toddler has dramatically increased - among other things - our grocery expenses as we purchase more fresh fruits/vegetables than we used to, as well as diapers, creams, etc (for simplicity purposes I just bundle all of that under the same 'grocery' category)...


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## chilly (Apr 3, 2009)

I've noticed that very few of the budgets posted here don't include any provision for income tax as an expense. I think I've only noticed one post in which taxes were a category.

Is this because most of you get a tax refund on a yearly basis? (Ahh, I fondly remember those days when I was in Ontario). Living in Quebec now, the tax grab is significant even if I almost max out my RRSP...


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## Addy (Mar 12, 2010)

One thing I strongly recommend... buy everything you can second hand for children. We purchased a Morgaine Lepine crib (high quality, hardwood, made in Quebec, retails for over 1K) for $400 when it was 2 yrs old, and sold it when we were done for $250.

We have a local family centre where you can go in, get a bag of clothes for $1 or trade a bag for a bag... I get most of my daughters clothes there and I'm positive I've saved hundreds if not thousands of dollars. She can only wear non-fancy clothes at daycare because she always ends up getting food, paint, dirt etc on them anyway so why spend $100 on an outfit that will only get stained anyway?

The only things I refuse to buy second hand unless it's from a close friend are breast pumps, carseats and bicycle helmets. Safety is a concern with these items.

So, buy quality second hand items, sell them (consignment shops are great for those who don't have the time or patience for kijiji etc) for half or more what you paid, and save a lot of bucks!

If you want to buy everything new, I dont' know how much you should budget. We budgeted $200/month for diapers, clothes, and other "baby" items for the first two years. It's less now, on average... but can still get pricey for the occasional item.


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## brad (May 22, 2009)

chilly said:


> I've noticed that very few of the budgets posted here don't include any provision for income tax as an expense.


Speaking for myself and my own personal reasons for budgeting, I don't include income taxes in my budget because the amount I pay for taxes is largely out of my control. Yes, of course I can and do reduce my income taxes through RRSP contributions and charitable donations, but I don't sit down and say "okay, this year I'm going to pay x in taxes." My budgeting is focused purely on what I do with my after-tax income.

I established my minimalist budget in order to set goals for saving and for setting caps on specific expenses that I want to keep under control.


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## chilly (Apr 3, 2009)

@brad: That is another way of looking at it. 

Technically speaking, I guess it's not really a 'budget' item per se for me, but more of an item I put there for cash flow analysis purposes. I.e. I know I'll be paying a certain amount at the end of the fiscal year to pay off my taxes, so I want to make sure I have enough to cover that amount, whatever it may be. 

I'm not sure I'm using a standard approach for this. In a way, I'm almost saying to myself that the "taxes" category is a yearly savings goal towards which I allocate X$ per month...


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## brad (May 22, 2009)

chilly said:


> Technically speaking, I guess it's not really a 'budget' item per se for me, but more of an item I put there for cash flow analysis purposes.


Yes, I think as we've seen in the posts here, the term "budget" means different things to different people.

I have categories for all my expenses, including taxes, but because my income taxes are withheld from my paycheque there's not much I can do about them. I do have to pay provincial instalments in addition to the regular paycheque withholding (for reasons too individual and complicated to go into here), and I do have to make sure I set aside enough every quarter to pay those.


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## randomthoughts (May 23, 2010)

chilly said:


> I've noticed that very few of the budgets posted here don't include any provision for income tax as an expense. I think I've only noticed one post in which taxes were a category.
> 
> Is this because most of you get a tax refund on a yearly basis? (Ahh, I fondly remember those days when I was in Ontario). Living in Quebec now, the tax grab is significant even if I almost max out my RRSP...


Yeah, I'm in Ontario, I haven't been contributing to RRSPs (until the house is paid off, next year) other than my pension plan contributions and end up paying about $50/year in income tax - not worth budgeting for.


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## steve41 (Apr 18, 2009)

> My budgeting is focused purely on what I do with my after-tax income.


 If this is so, then how do you budget unless you know what your tax will be? Tax is a hugely important part of the planning process.


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## brad (May 22, 2009)

steve41 said:


> If this is so, then how do you budget unless you know what your tax will be? Tax is a hugely important part of the planning process.


Like I said, my version of "budgeting" is tightly focused on controlling spending (or achieving savings goals). I don't do an overall budget for my finances. My current budget tracks just five or six line items. It's not related to planning at all.


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## the-royal-mail (Dec 11, 2009)

I think this tax business is much ado about nothing. Most people who work full time know what their paycheque is going to be, so they just plug in the rough amount and then your expenses deduct from there. When you are buying big-ticket items of course you need to know what the taxes are. But these are not recurring monthly expenses. When you need to buy that TV you need to know the full cost which comes to $x and then you simply plug that number into your excel sheet and see where you can afford to spend $x. A lot of this goes without saying.


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## Square Root (Jan 30, 2010)

I suspect for most people tax is simple-deducted at source so simply record/plan income as net of any tax or benefit costs. For others (myself included) tax payments will also reflect taxes on dividends/other non withheld income items/alimony deductions. In my case these amounts are very significant and quite lumpy. As such it is important that I include them in my budget. Once all my employment related incentive comp is cashed out, I expect this will settle down but taxes should still be a fairly significant refund each year. For this reason I include it as an income item although it could also be a negative expense item. During the next few years my prime concern is planning cash flow but starting in 2012 when everything has reverted to steady state (income fixed at pension plus dividends/interest) it will be much simpler. It is at this time that expenses cannot exceed income (including taxes)


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## Addy (Mar 12, 2010)

Plus it's not uncommon to own a small business, so taxes need to be thought of in advance... and how they will be distributed between spouses (if possible).


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