My Budgeting

Although I have a version of Quicken, I do my initial budget in a spreadsheet. Quicken is only good for entering the figures once you have them. A good budget covers what you have to spend (rent or mortgage payments, utilities, insurance), what you are going to spend (food costs) and allows you to pick and choose what you spend the remainder on.

I do my budging for the next year in December. I use last year’s tax form to estimate my tax for the year. By December I have a good idea what my income for the year in the various categories will be (like dividend income and CPP). I take out the required money from my RIF accounts and pay the tax estimate that I calculated.

The RIF money I take out is to cover the taxes of the current year and fund next year’s spending. So, at the end of 2018 I take out what I am supposed to out of RIF, I pay my 2018 taxes and use the rest to fund 2019. I top up my Reserve Fund, put money into my TFSA for 2019 (in January 2019) and extra go to buy stock for my trading account.

I have a reserve fund. This is for unexpected expenses. I do not have any medical coverage since I stopped working. What I seem to spend a lot on is dental care. As mentioned above, once I pay my taxes, I top up this reserve fund.

From my budget, I know how much I need for living expenses monthly. Mostly the dividends of the Trading Account can cover my monthly living expenses. I still need to take out a small amount from my Reserve Fund for current spending. Near the end of each month I transfer from my trading account the amount I need for living expenses for the following month.

One thing I worry about is that my income taxes have gone up by 14% per year over the past 5 years. This is due to the money I need to take out of my RIF accounts. However, the portion in my RIF accounts and other trading accounts has changed over the years. When I stopped working in 1999, I have 50% in RIF accounts and 50% in other accounts. Now the percentage is 40% in RIF accounts and 60% in other accounts.

On my other blog I wrote today about Manulife Financial Corp. (TSX-MFC, NYSE-MFC) ... learn more. Next, I will write about Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more on Wednesday, February 20, 2019 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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