Expenses (Vehicles, Travel, Renovations, etc.)

Lifestyle expenses are typically entered under the After-Tax Spending column in your projections. You may wish to highlight and separate out certain expenses from the After-Tax Spending value for clarity and this article details the steps to do this.  Expenses are entered as negative income values on the Planning page.

1

Enter the expense as a negative income.

To view the Income page, select Scenario Setup -> Income

Example: Enter an expense for a new vehicle every 5 years.

On the Income page, click Add Income. In the Description column, enter Vehicle.  The value entered for the description is the column title for this expense on the Planning page. Leave the Amount at $0, select Other for the type, and keep the Taxable and RRSP Eligible columns set to No. The value entered for the Amount will be applicable for every year of the projections.  This is why we enter $0 as the Amount here, and then we will edit the expense amount in the applicable years right on the Planning page.  Go back to the Planning pages.

On the Planning pages, there is now a column called Vehicle (or whatever name you decided to give the expense).  Enter the amount of the expense as a negative number for the year(s) in which the client expects the expense to occur. In the example below, we are showing a new vehicle purchase every 5 years.  

Tip: The values in the expense column are displayed in nominal dollars (not real dollars) to account for inflation and you can have Snap calculate this for you.  Enter the real dollar amount in the pop-up window and click the Index at the checkbox to have the software automatically index that amount based on the percentage entered. (Don't select the copy down until age checkbox for this calculation.)

For a purchase of a new vehicle for a cost of $30,000 (today's dollars) in a future year, click the blue $0 value in the Vehicle column in that year.  Enter -$30,000 in the pop-up window and check the box to index at 2.00%. The indexing percentage will default to inflation but you can also change the percentage if you wish.  Make sure to enter the value as a negative number. Do not select the Copy down until age XX checkbox.

After clicking the blue checkmark, you will see the indexed value in that year in the Vehicle column. To update the projections, make sure to run the scenario.

Tip: For expense amounts that you wish to split between 2 spouses, do the same steps above for each spouse, and allocate a portion of the expense to each spouse. 

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2

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, this means that before age 65, no automatic contributions or withdrawals from the assets will be made.  You will 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 2025, the After-Tax Spending 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 After-Tax Spending value will be displayed as a negative number. 

Example 1: Automatic cash flow management is disabled

Let's cover the additional vehicle expense in the year 2023 by a withdrawal from the non-registered account. 

Click the $0 value under the Contribution column for that asset to specify a withdrawal.  Here, we have entered a -$31,212 value.  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 After-Tax Spending 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.  

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Example 2: Automatic cash flow management is enabled, and a withdrawal override is made to a specific asset.

Let's look at the year 2028 when the vehicle 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 previous year or next year. 

If we would prefer the withdrawal for the vehicle purchase to come from the TFSA instead, we can manually enter this. 

Less money is automatically withdrawn from the non-registered account as a result.

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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 TFSA we will withdraw nothing from that account and create a new loan for $34,461 which will start on January 1, 2028. 

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

Click Add Debt and enter the new loan with the Future Start Age. You can also access the corresponding year by selecting the gear icon in the entry box.

Since the loan covers the entire expense, the only additional withdrawals that are required from the assets are to ensure the annual debt payments are made.

Additional Comments

Entering expenses follows the same process as entering lump sum income amounts such as an inheritance, pension lump sum, etc. The only major difference is that expenses are entered as negative numbers. If instead, the lump sum was a source of income (such as an inheritance), then you follow the same steps but make the amounts a positive number for both the income and contributions to various assets.