I can’t really recall exactly when I decided that we should start tracking our expenses and setting a budget every year. But it did turn out to be a fine decision. My electronic Quicken files go back to 1998, and I remember using spreadsheets and pencil and paper before that. So, it’s been a while. Being obsessive does have some real life benefits.
Below, I have listed the categories, and individual expenses itemized under each, that we are currently using. These are exactly as we use them, including separate entries for the Overlord and myself wherever necessary. I have changed our names to “Retiree” and “Love-goddess” to — as the saying goes — protect the not so innocent.
Many of our expenditures will be similar to your own, but there are many that won’t be applicable to your situation. Or, you know that you will want to track things I mention differently. The purpose here is get you thinking about how to organize your own tracking and budgeting, not convince you to copy what I am doing.
Beside each individual expense I have attempted to provide some examples of what sorts of entries fall into each. I could have added “etc.” at the end of each set of examples, but that seemed redundant, and probably would have driven readers crazy.
Additionally, there are many things missing that you will want to include. For example, we are not tracking any costs related to the raising of children. We are finished with that — we hope.
I have also provided some examples of potential income streams at the end to get you thinking about where your income will come from in retirement as well. Needless to say, you should be tracking your income throughout the year as well as your expenses.
A final word of advice, do not have a “Miscellaneous” category. There is no such thing. If you find that you have suddenly had an expenditure that doesn’t fit any of your categories, you need to add a new category and budget for it. This may happen a fair amount in your first year. Not to worry, it just means you are thinking about where your money is going, and preparing yourself for many years of accurate budgeting in the future.
Our Expense Categories
As you will see, some of our categories are standalone expenses (e.g. Charity, Funds Owed), while others have several sub-categories or individual expenses. Most of the examples I offer represent actual types of expenses we incur, but there are a few thrown in that popped into my head that don’t really apply to us, but may be relevant to others (e.g. casino gambling– pretty sure it’s a good idea to have a handle on this if you’re doing it).
CHARITY – charitable donations
CLOTHING:
Clothes-Love-goddess – also includes accessories (jewelry, gloves or mitts, hats, ties, belts)
Clothes-Retiree – same
Footwear-Love-goddess – shoes, sandals, boots and slippers
Footwear-Retiree – same
Alterations – all alterations to clothing items
Dry Cleaning – dry cleaning charges
COMPUTERS & OTHER DIGITAL EQUIPMENT:
Consumables – printer paper, ink cartridges, blank CDs/DVDs,
Hardware & Software – computers, tablets, printers, peripherals, smart phones, all purchased software for all devices
CONSUMPTION:
Cleaners & Consumables – paper towel, kitchen wraps, toilet paper, Kleenex, garbage bags, laundry detergent; does not include items used for ongoing mechanical operation of the home (e.g. lightbulbs, water softener salt)
Groceries – all purchased edible products; does not include pet food – all pet expenses should be tracked separately
Restaurant – all meals purchased and eaten in restaurants; restaurant meals eaten while on vacation or travelling tracked separately
Take Out – all meals or snacks picked up or delivered to home
Water – large 18L bottles of drinking water
FINANCIAL:
Bank Charges – safety deposit box, e-transfer fees, monthly account fees,
Fees – charge card fees, income tax preparation, financial advisor fees
Life Insurance – if you have it
FUNDS OWED – items you might purchase for others, and will be reimbursed for; this does not include gifts; not really part of your own ongoing expenses
HEALTH CARE – services of health professionals (dentist, massage therapist, optometrist, etc.), prescription drugs, over the counter medications, glasses; anything related to the ongoing maintenance of family members physical and mental health
LIFESTYLE:
Books-Pleasure – fiction and non-fiction, e-books
Booze – not gifts for others, not in restaurants or bars
Fitness & Recreation-
Fitness Equipment – small items like weights, large items like treadmills
General-Love-goddess – health club fees
General-Retiree – health club fees
Golf-
Equipment – clubs, balls, bags, accessories
Lessons & Practice – lessons from pro, driving range fees
Play – green fees, cart rentals
Gifts-Others – gifts, cards, wrapping paper, gift bags
Gifts-Selves – gifts, cards, wrapping paper, gift bags
Home Entertainment – movie purchases or rentals, music downloads, CDs, DVDs
Lotteries, Betting – lottery tickets, casino betting, sports bets, poker
Newspapers & Magazines – delivered, purchased, or online
Outside Entertainment-
Movies, Other – in theatre-not home rentals
Music Events – concerts, cover charges in bars
Sporting Events – live attendance, pay per view
Theatre, Cultural Events – plays, opera, ballet
Stationary, Stamps, Photos – envelopes, stationary (not computer paper), postal & courier charges, photo printing or photo paper for printer
PERSONAL CARE & COSMETICS:
Cosmetics & Spa – cosmetics, non-hygiene related body products, visits to spa or beautician
Hair Styling – hair cuts/styling, washing, colouring, hair sprays, combs and brushes
Hygiene – hand or liquid soap, shampoos and conditioners, toothpaste, deodorant, shaving products, mouthwash, sanitary napkins
RESIDENCE-Fixed:
Cable – break out cable, internet, & phone even if provided in a bundle
Gas – if you use an alternate heating source (e.g. electricity, wood) try and establish its ongoing cost
Hydro – self-explanatory
Insurance – remember to check for alternate provider from time to time
Internet – self-explanatory
Phone-Basic Services – phone costs other than long distance; may include long distance if you have an all inclusive bundle
Phone-Long Dist. – long-distance charges not covered in your phone bundle
Phone-Cellular – think about giving up your landline if you are primarily using a cell phone for your phone calls
Taxes – this would be replaced by Rent for renters
Water Heater Rental – rent or buy, your choice
RESIDENCE-Variable:
Cleaning – regular maid service, carpet cleaning by a service
Consumables – light bulbs, water softener salt, batteries, furnace filters
Furnishings & Equipment – things you can potentially take with you when you move; furniture, electronic equipment (not covered under computers), tools, appliances, decorations, et al
Yard-care, Plants, Supplies – items or services purchased that relate to the outside or property (e.g. grounds-keeping fees, fertilizer and other chemicals, plants, snow removal)
Renovations or Improvements – finishing basement, kitchen or bathroom renovations, typically things that add value to your home and can’t be taken with you when you move
Repair, Replace, Maintenance, Service – usually items purchased that become attached to the property, such as new light fixtures, roof, furnace, new windows, that typically don’t add much value to the house; or services to the existing structure or equipment, such as painting, duct cleaning, furnace repairs
SELF IMPROVEMENT:
Course or Training – tuition, lessons
Self-Directed – books, instructional DVDs
SPENDING MONEY:
Love-goddess – cash taken from bank account for personal use, purchases not recorded in any other category
Retiree – same
Joint – cash taken from bank account for shared personal use
* This is the only category that we use that remotely approaches being a miscellaneous one. We don’t want to have to make notes about all of our small personal cash purchases because the amount of effort to do so would greatly out weigh any benefit. It typically involves about $150.00 each per month, so not a large percentage of our expenses. Virtually all of our other expenditures are done by credit card. Yet another important topic, for another day.
TRANSPORTATION-fixed:
Car Loan – should probably be the only consumer debt you ever carry in retirement
Insurance – should be comparison shopped each year
TRANSPORTATION -variable:
Fees, Fares, & Fines – road tolls, CAA/AAA, tickets, license renewal
Fuel & Car Wash – self-explanatory
Repair & Maintenance-
Car 1 – all repairs, replacement or new equipment, maintenance (e.g. oil changes, snow tires, body work)
Car 2 – same
TRAVEL:
Travel-General:
Accommodation – if travelling overnight for a purpose other than vacation (e.g. wedding, visit friends, attend special event)
Restaurant – if forced to eat in restaurants because of travel for special reason (e.g. wedding, visit friends, attend special event)
Transportation – if required to pay for special transportation to special event (e.g. plane, train, taxi)
Travel-Vacation:
Family – all aspects of any joint vacation (e.g. travel, hotels, food, visits to cultural sites, gifts)
Love-goddess – all aspects of a solo vacation (e.g. special trip with sibling or friend)
Retiree – all aspects of a solo vacation (e.g. golf vacation with buddies)
Sample Income Categories
You may not feel inclined to track all of your income streams as separately as I have shown here. But, experience has taught me that it is good to have very precise information on where your money is coming from as well as where it is going.
INCOME-Business (for anyone who is doing consulting work or operates some other small business)
INCOME-Personal – Identify all regular income streams separately for you and your spouse/partner if you have one
CPP – find out how much you will be getting before you retire
OAS – ditto
Pension – if you are lucky enough to have one
Salary – if you have a part-time job
INCOME-Capital Gains – sale of equities or secondary properties
INCOME-Credit Card Rebate – beneficial credit card use; another topic for another day
INCOME-Dividends – from dividend paying equities
INCOME-Interest – from your cash savings
INCOME-LIRA/LIF – rules for withdrawal different than from a RRSP
INCOME-RRSP/RIF – consult with financial advisor to check whether it is more tax efficient for you to start taking this money out before you turn 71 and are forced to
INCOME-Rental Property
INCOME-Special – if you are lucky enough to pick up a windfall
INCOME-Tax Return – hopefully it is a return and not a payment
INCOME-TFSA – this is the source from where you want as much income as possible to come.
I am interested that you think car insurance should be shopped every year. DoesN’t staying with same company have advantages as you get older?