Additional Expenses (Vehicles, Travel, Renovations, etc.)

A total of regular recurring lifestyle expenses are typically entered under Base Expenses in your projections. If you would like to highlight and separate out certain expenses from the Base Expenses value for clarity, you can do this as shown here. Additional expenses can be entered directly under Scenario Setup -> Expenses -> Additional Expenses.

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Enter the expense under Additional Expenses

Go to the Expenses page by selecting Scenario Setup -> Expenses.

On the Expenses page, click Add Expense within the Additional Expenses section.

The text within the Description column will display as the column title for this expense on the Planning page. Input the Amount and select Joint as Yes to split it 50% to each spouse.

Remember that Snap works with nominal dollars within the projections. To convert from today's dollars to future dollars, you can use the Inflation field. The amount entered will be converted to nominal dollars for you based on the Inflation percentage and the number of years until the person reaches that age. The Inflation value will default to General Inflation (initially set up under Scenario Setup -> General). You can enter your desired Inflation value in this text field by typing it in. Your entered value will override the General Inflation default.

You can specify the From Age and To Age (or the specific date if you select the gear icon in those cells). If you leave the From Age blank the expense will start in the first year of the projections. If you leave the To Age blank, the expense will continue until the end of the projections.

Enter the Frequency of the expense. If you have an expense that is only for one year, make sure to equate the From Age and To Age.

You can choose to Highlight up to 6 expenses between both spouses. Highlighting means that these expenses will be displayed individually on the Cash Outflows chart. If the expense is not highlighted, it will be referred to as part of the Additional Expenses category on the Cash Outflows chart.

Review the Planning page

On the Planning page, there are new columns for the Additional Expenses. If there is a spouse in the projections, use the Combined Planning page to refer to all expenses. The total expenses are displayed on the Combined page and the individually allocated portion of each expense is displayed on the Planning page for each spouse. By default for joint Additional Expenses, the expense is split 50% to each spouse. Any modifications can be made back under Scenario Setup -> Expenses or directly on the Combined Planning page, even for individual expenses. (There is also an Advanced Option to disable the automatic allocation of Base and Additional Expenses to each spouse. This should only be used in rare use cases.)

In this example, a $30,000 vehicle with inflation at the General Inflation rate of 2.1% purchased next year would cost $30,630.

Using overrides for the Additional Expenses on the Planning page

If we wanted to change this amount to $40,000 of today's dollars instead of $30,000, we could adjust the amount under Scenario Setup - > Expenses for all of the applicable years. Alternatively, we can edit the amount directly on the Combined Planning page and edit a single year's expense. Click the value under the expense column, and in the pop-up window adjust the amount and click the Index at option to have Snap adjust the expense to the future year for inflation.

You can clear the override by clicking the "x" on the right side of the cell or by clicking the dollar value and checking the box to Clear override.

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Ensure the expense is being funded as desired.

If the expense is entered in a year before the CFM Start Age, (age 65 in the above example) you'll need to manually withdraw money from one or more of the assets to cover the expense if withdrawals are needed.  Otherwise, as shown above, in the year 2024, the Base Expenses value is decreased by the amount of the expense.  The vehicle is being paid for that year out of the available cash flow, leaving less for lifestyle expenses.  If there isn't enough cash, the Base Expenses value will be displayed as a negative number.  Here we're looking at John's Planning page which shows 50% of the joint expense, $15,315 in 2024.

Example 1: Automatic cash flow management is disabled (Pre CFM Start Age)

Let's cover the additional vehicle expense in the year 2024 by withdrawing from the non-registered account. 

Click the $0 value under the Contribution/Withdrawal column for that asset to specify a withdrawal.  Here, we have entered a -$15,315.  Make sure to enter a negative number to indicate a withdrawal from the account.

After running the scenario the projections will be updated.  Note that the Base Expenses values are much higher now in that year because the vehicle purchase is covered by the non-registered account withdrawal rather than having the purchase come from the client's cash flow.

You can also use this method when automatic cash flow management is enabled and you wish to enter a withdrawal from a specific account.  For joint expenses, make sure to complete the withdrawals for both spouses.

Example 2: Automatic cash flow management is enabled (Post CFM Start age), and a withdrawal override is made to a specific asset.

Let's look at the year 2029 when the vacation purchase is being made.  Since the CFM Start Age has been reached by this point in the projections, Snap automatically withdraws from the assets to cover the additional expense that year.  This is indicated by a larger withdrawal from the non-registered account that year than in the next year.

Example 3: Model a new loan to cover the expense in full, or in part.

You can show an influx of cash in a future year by entering a loan with a future start date.  In this example, instead of withdrawing from the non-registered account, we will create a new jointly-owned loan for $30,630 which will start on January 1, 2024.

To go to the Debts page, select Scenario Setup -> Debts.

Since the loan covers the entire expense, the only additional outflow of cash that is required is to ensure the annual debt payments are made. The Base expenses value for 2024 is now more in line with the year previous to the vehicle expense. By the end of the year 2024, only $11,942 is owed for John's half of the loan because he has made payments of $4,200 over the year.

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