Budgeting and Taxes

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Lots and lots of stuff happening last week. The high point was my community workshop on budgeting. Wow. What a great group!!!

When I arrived Thursday night, January 31, there were only two women there. The one lady said, “Are we the only two broke women in Maple Ridge?” We all laughed.

Soon the room filled up with a wide range of ages and interests. What stood out more than anything else was their uniform interest in budgeting. They were all there for the same reason.

Budgeting is popular at this time of year. For some, it forms part of their New Year’s resolution to do better with the family finances in the New Year. For others, their circumstances are tight. They need to find options.

Everyone’s situation was different – a young single mom with an infant, her mother, struggling couples where women were left to manage the domestic home-front finances, single and divorced women.

One shouldn’t be too surprised. In the past when I have been involved with public seminars regarding money, you could assume that half the audience had been separated or divorced.

Another interesting statistic from the past – many women wait until the New Year to get out of unhealthy relationships and need the tax return to hire a lawyer.

The entire group asked excellent questions, offered valuable opinions on their expenses and were eager to find a better way to manage their money – or to receive confirmation that they are doing okay.

This was excellent timing as Statistics Canada just released the most recent results on their study of household expenses. You will note in the following list of household expenditures that the average Canadian spends, annually, $55,151 (excluding taxes) on food, housing, clothing etc. as listed below.

Average household expenditure
(Canada)
2010 2011
$
Total expenditures 71,282 73,457
Total current consumption 53,724 55,151
Food expenditures 7,823 7,795
Shelter 14,997 15,198
Principal accommodation 13,598 13,991
Other accommodation 1,399 1,208
Household operation 3,846 4,135
Household furnishings and equipment 1,957 2,027
Clothing and accessories 3,455 3,360
Transportation 11,059 11,229
Health care 2,214 2,211
Personal care 936 1,082
Recreation 3,576 3,711
Education 1,152 1,216
Reading materials and other printed matter 198 221
Tobacco products and alcoholic beverages 1,198 1,199
Games of chance 147 166
Miscellaneous expenditures 1,167 1,602
Income taxes 11,936 12,442
Personal insurance payments and pension contributions 4,013 4,191
Gifts of money, alimony and contributions to charity 1,609 1,673

As discussed at our workshop, averages are deceptive as they include the highest and lowest incomes. And, in the above chart, we know nothing about the family size, if there are children – in fact; child care isn’t even factored into the study.

However, the research is helpful as it outlines what people actually spend their money on.

Other points of interest include their observation that Canadians spent 2.7% more in 2011 than in 2010 on goods and services.

RRSP’s came up in our discussion. This is a bit more complicated as RRSP’s do represent savings – that is to say, a surplus after all the essential costs of living are met. Public policy regards RRSPs as essential as they are now exempted from a bankruptcy proceeding (under certain regulations). Moreover, governments along with financial advisors constantly encourage people to have a retirement savings plan.

More on this later, but first I wish to thank everyone for having the courage to come out last week and participate in my ongoing dialogue with Women and Money.

More seminars are planned and discussion groups are being organized for the future.

As tax season approaches, many of us are forced to go through all of our expenses, debt and income, hoping for tax deductions and a positive outlook of our finances. Yes budgeting and taxes go hand in hand, a perfect time of year to review your budget (or create one).

If you are looking to create a comprehensive budget for your household, check out our easy Budget Worksheet, a free download to get you started… what are you waiting for???

For your information I leave you with the RRSP limits since 1990.

Year

RRSP $ limit

1990 (Old limits)
1991 $11,500
1992 $12,500
1993 $12,500
1994 $13,500
1995 $14,500
1996 $13,500
1997 $13,500
1998 $13,500
1999 $13,500
2000 $13,500
2001 $13,500
2002 $13,500
2003 $14,500
2004 $15,500
2005 $16,500
2006 $18,000
2007 $19,000
2008 $20,000
2009 $21,000
2010 $22,000
2011 $22,450
2012 $22,970
2013 $23,820
2014 $24,270
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