According to a CIBC study in 2012, 59% of retirees end their working lives in debt.  Today, half of Canadians report that they expect to retire in debt.  The media is full of messages about ‘what’ we should spend or save, but we seem to be missing the ‘how’. Having a spending plan answers that question.

Regardless of income or assets owned, many Canadians struggle to understand their spending. Occasionally they may visit their budget, and quickly abandon it out of confusion or embarrassment.

When we talk to our clients about their cash flow, they often say things like, “My income is good, so why can’t I save more?” or “Where does my money go?” These questions tell us when someone doesn’t have a good handle on their money.

Where to Begin?

Step 1: Determine Your Top-Down Spending

  1. Determine the ANNUAL household take-home income (for example, direct deposit x 26 for each earning person)
  2. Subtract contributions to savings made from take-home pay, like RRSP, RESP and TFSA deposits
  3. Add any major withdrawals from any bank account
  4. Subtract tax return payment or add tax refund

This number is how much your household spent! No magic, no hidden amounts, but it gives you the total amount spent in a year on everything.

Step 2: Determine ‘Total Spend’

Of course the other approach is to determine your total spend. This is a good check on the number you calculated in step 1 above. Determining total spend can be achieved either by manual tracking (which is time-consuming and requires a lot of discipline), or by using a tracking software like or YNAB (You Need a Budget). Many of the Banks also have good spending tracking tools on their online banking websites. On these tools, you can track expenses and create budgets and savings goals. They’ll even alert you when you’ve gone over budget!

Do you have a cash flow plan? A plan that really works?  One that you can stick to, knowing that you can realize your goals and eventually retire without worry?

Call us or email us today to talk about YOUR spending plan!

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