Blog - Fee-Only Financial Planning / Advising in Kitchener Waterloo Cambridge - WD Development


Finding your Fixed expenses

Fixed expenses- the money that you’ve already spent based on the choices that you’ve made.  These expenses are scheduled to go out at a regular time in a roughly regular amount.  The exceptions to the ‘regular time, regular amount’ rule are costs to maintain your house (if you own) and your car.  These expenses are less predictable in a short time period, but ARE predictable over a longer time period.  The other truth about these expenses is that they WILL happen.  If you own your home, you can put off some maintenance for some amount of time, but you can’t put maintenance off forever.  Same with your car- the first few years of a new car are often pretty low-expense on the maintenance side.  Then expenses will rise.  Plan for this; it’s not a surprise.  You own the thing, you need to maintain the thing.  Your fixed expenses are not the only required costs that you have, however, if you want to organize your spending & saving in a sustainable way, you need to know what you’ve already committed to and what expenses you can make day-to-day choices on.   


To find these expenses, take a look through your bank statements and credit card statements for the past 12 months.  You are only looking for 'regular time, regular amount' expenses.  Don't total all of your spending; some cateogries that occur regularly are going to be omitted in this exercise because the amount varies enough that the category will throw off you feeling in control of your money.


Use the chart below as a guide: expenses listed on the left are fixed expenses- that's what you're looking for in this step.  Expenses on the right are variable- leave those off for now.  There's a few situation-specific exceptions that may make sense to you- if you use a meal delivery service, that's a fixed cost- you know how much is leaving your account to cover that decision.  Using the meal service moves it from a variable (grocery) to fixed (contract) expense.  If you commute for work, and know your gas costs, maybe it should go on the fixed expense list.  Be careful about adding too much to the fixed list, unless you really wanted a full budget experience!  If you do, great- use both sides of the chart and brak out all your transactions for the past 12 months.  If you want a faster solution, focus only on your fixed expenses.


Once you've totalled your fixed expenses for a month, including due dates, line those up against your income deposits.  You'll start to see where they line up, and where they're giving you trouble.  You'll also start to see how much money is available from each pay period/ income deposit to cover your variable expenses.


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Organizing your Expenses

If organizing your finances has moved to the top of your priority list, that’s great news.  If you’re feeling confused & frustrated about your finances and would rather pull your own eyelashes out instead of dealing with them, but, it’s a new year and tips are everywhere you turn, I’m glad you’ve read this far.


The majority of work that I do with clients involves the foundational work related to money in/ money out.  You need to know these numbers before you start making changes.  You need to know what’s happening now to make effective choices that will move you to a better place over time.


If you need a new look at your money and are ready to do some math, this post will give you a framework for understanding where you are now and what changes will improve your situation.


Step One: knowing how much is coming in and when


You need to know how much is deposited to your bank account and when that happens.  When we try to untangle our finances, we often talk about our salary.  In this context, that is not a useful number.  None of can make choices on the full amount of our salary.  There are deductions before any money lands in our bank account.  Sometimes the deductions are large. And valuable.


I recommend that you look back at a payslip from 2022- look for the net amount deposited, or if you have your last payslip, find the year-to-date (YTD) net amount.  That will tell you how much lands in your bank account.  This is the amount that you need to focus on when you’re asking questions about what’s affordable.

Draw out the timing of the deposits so that you can compare your deposits to when your expenses happen.


See the chart below for a list of common deductions and an explanation of the benefits to you.  Need more clarification on what's happening in your specific situation?  Contact Sara for an appointment by booking an initial consultation here 

or send an email


check back on Jan 23 for Step Two: finding your fixed expenses 


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New 2023 numbers, Part 2

Next up in 2023 numbers that matter:


Canada Pension Plan contributions: $3,754.45 for employers & employees/ $7,508.90 for self-employed Canadians.  This is a noticeable hike; it's part of a multi-year plan that was approved by the provinces & feds in 2015.  Good news- there is also increased benefits that are funded by this increase.


EI premiums: $1,002.45 for employees on max insurable earnings of $61,500


Canada Pension Plan payments: max monthly retirement payment (age 65) $1,306.57.  A note that the average Canadian receives 56% of the max amount - $731.68/mnth.  CPP pays a number of other benefits, including post-retirement benefits, disability and survivor benefits.  For the entire list of CPP & QPP benefits, click here

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New 2023 Numbers Part 1

Welcome to 2023!

Here are some of the new numbers to get you started:


- if you use the first 60 days for your 2022 contribution- 18% of your earned income to a max of $29,210

- if you're done with 2022 contributions and moving into 2023- 18% of your earned income to a max of $30,780 



- new 2023 room- $6,500

- total room if you've never contributed, were 18 or older in 2009 & lived in Canada- $88,000


You can find your personal contribution amounts in your myCRA account online (RSP & TFSA) or on your Notice of Assessment (RSP only).  Remember that the amounts you see online can lag your actual contribution amounts- the information from the institution to CRA isn't instanteous.  If you have scehduled monthly contributions, or just made a lump-sum contribution, make sure you subtract that amount before making another contribution.


Inflation adjustment for income tax brackets & benefit amounts: 6.3%


Basic personal amount- this is the amount that you can earn without paying any federal tax.  New for 2023- $15,000 for those earning less than $165,430 (net), gradual reduction for those between $165,430-$235,675 (net) and $13,521 for those about $235,675

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What helps when terrible things happen

I love the practicality of this podcast in general, this episode in particular.

Nora covers her own terrible thing and what helped her, and includes other's stories of what helped and what they appreicated most in their hardest times.


Is this episode only about how money helps in terrible times?  No.  Money is mentioned several times and I want you to hear that from people who have experienced unplanned deaths and other sudden changes.  I also want to hear about the other needs that people whose lives have been upended have and how you could step closer to be a support and bring some peaceful moments to families who have had an experience that they wish never ever happened.




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House Affordability


Need personalized advice on what's affordable or how to adjust to increased expenses?  

Adjustment Plan- intro call/ planning session + summary letter/ check-in session at 3 mnths - $1200 incl HST


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Dealing with debt in family businesses

I love this post by Elaine Froese.  My hope is that you come away from reading it believing that there are solutions when you have debt, you can change your current situation and the effort to change is worth it

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Education is an important step in many careers, and it can be expensive.  Five ways to fund education costs


1. Using a Registered Education Savings Plan (RESP) in Canada or a 529 plan in the United States


Both of these plan types are designed to give parents/grandparents/ family & friends a place to save for a child’s post-secondary education costs.  The contributions made to the plan are not tax-deductible, however, the investment returns within the plan are tax-sheltered until the money is withdrawn.  These accounts work for child up to the age of 17.  There is a lifetime maximum contribution, and there may be some annual limits that you need to be aware of.  The money within an RESP or 529 must be withdrawn for the purpose of education, otherwise there will be tax consequences on the investment growth and any government grants received.


2. Using a Tax-Free Savings Account (Canada)


Many people use a TFSA to save for education.  The contributions are not tax-deductible, however, the investment returns within the plan are tax-sheltered until the money is withdrawn. A TFSA can be used to save for a child’s education or your own return-to-school as an adult.  There are annual contribution limits; you can confirm your lifetime contribution room and amount available at myCRA.  There are no restrictions on the use of the money within a TFSA.


3. Using a non-registered account 


Depending on your education goals & costs, you may save in a non-registered account- either a savings account (no investment or market risk, the money is safe and the value will not fluctuate) or an investment account (investments work if you have a 3-15 year timeline for the money to grow).  There are no specific tax advantages in a non-registered account- any income that the account generates will be reported on your income tax return annually.  The benefit of using a non-registered account to save for education- you have a dedicated place for savings, you can track your progress and you will know how much you have when you start a program.


4. Borrowing 


Student loans, bank loans and using a line of credit (secured or unsecured) are possible when you are looking to increase your education.  In my experience, it’s important to understand the timing of payments: a student loan will not require payments until you graduate; a bank loan will require payments immediately; a line of credit requires interest-only payments as soon as you start borrowing.  It’s important to understand how much debt you may end up with at the end of your program.  It’s important to understand the job prospects and starting salaries in your chosen field.  It’s important to include your other life goals when you are mapping out your potential debt load at the end of your program- are you planning to get married? have children?  do you anticipate moving at the end of your program?  


In Canada, you can borrow from your Retirement Savings Plan (RSP) using the Lifelong Learning Program- this gives you access to funds, some time to pay back and there's no interest applied (unlike a regular loan or line of credit).  I advise using this option very cautiously- numerically, it looks good.  Practically speaking, it doesn't work well for most people who use it and they don't end up 'ahead' of other borrowing methods.  In my experience- if you can give your RSP account one job- 'be there for my retirement' and work out your education costs another way, it is less confusing, less discouraging and easier to pay back the costs.


5. Earning income while in school or accessing funding


Is it possible to work while you’re in school?  Can you buffer the costs of your program and your living costs with a part-time job?  If you’re returning to school, can you attend your program part-time and still work?  Are there any scholarships/bursaries/ funding available?  Check with the institution that you are applying to- there are numerous programs that are under-used; largely because they are hard to find.  Ask questions early in the process and broaden your search.  My favourite example- if you grew up in the foster system or as a Crown ward, check out this list for the options in Ontario.  Every province has options for kids who grew up in care and now want to pursue post-secondary education. 

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Know your income.  It seems like a silly step, but many of us don't know our after-tax, after-deduction income.  I mean what lands in your bank account after your income taxes have been deducted, any costs that you pay for a health benefit plan (FYI- that disability insurance that you have through work? lots of us pay for our own disability insurance with after-tax dollars, which is a great thing.  And it reduces how much of your salary you take home), and any RSP savings that you do.  Know how often you are paid, and convert that into how much lands in your bank account every month.  If you are paid bi-weekly, you need to multiply your number by 26, then divide by 12.




Add up your fixed costs.  You can break this down either by pay period or by the month.  Make sure you correctly account for any weekly or bi-weekly payments (mortgage and car payments often occur like this- we like the feeling of accelerating our mortgage payments and car dealerships like the smaller advertised payments with a bi-weekly or weekly schedule)  Anything that is scheduled to go out, or goes out on a regular basis in a roughly predictable amount is a fixed cost.  These are costs you have already agreed to.  I mean ALL of your fixed costs- mortgage/rent, car payment and cell phone may be the obvious ones.  I want you to include your gym membership, Netflix and that life insurance policy that you pay for once a year.  I also want you to include amounts for car maintenance and home maintenance.  You bought the car- car repairs shouldn't be a surprise.  You bought the house- maintenance and repairs are not a surprise.  Make sure that your bank account isn't surprised.  And if your bank account is surprised in the short-term, while you're getting the hang of your fixed costs- make different choices in your variable spending.




Whatever is left over after adding up your income (either per month or per pay period) and subtracting your fixed costs is available to pay for your variable costs.  Variable costs are all of the things that may still occur regularly and may still be essential AND the costs vary enough to make it difficult for most of us to work with a traditional budgeting framework.  Gas, groceries and clothes are essential, and they happen regularly....but we often over-estimate how much we're going to spend, or we're trying to use a traditional budgeting framework.  We plan out how much we're going to spend on groceries.....we pick up a few extra things on that trip we made while we were hungry......after the month is over, we update our budget.....realize we missed.....and get frustrated and feel like we failed.  Don't do that.


Once you know your income and your fixed costs, move the remaining amount over to a different bank account that you only use for your variable costs.  Now you know how much you have before your next paycheque, and you can decide ahead of spending whether to shop for clothes, go out for dinner or buy that thing you saw the other week that would look great in your living room.  Not in hindsight, foresight.  You know you've covered all of your scheduled costs in your main bank account.  You now have a bank account that clearly shows you how much is available to cover the costs that you can exercise some control over- either in the timing, the amount or both.

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Sara McCullough
January 23, 2023
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Fraser Lang
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