The Frugal Canadian

A frugal spender seeks to find new ways to save money and increase her net worth.

Friday, January 13, 2006

2006 Personal Budget adjustments

I’m making a small adjustment to my budget based on my pay raise. I plan on saving my entire raise this year, so there is no adjustment to my expenses. My income has increased but due to tax deductions, I won’t be seeing any additional cash flows for the first 6 months of the year, while the Feds take off EI and CPP deductions. During the first six months, my new savings rate will be 49%. Starting in July when I’ve maxed out on these deductions I will jump up to 53%. These changes will be adjusted in my next monthly update.

A key initiative for me this year, will be to find a balance between RRSP contributions and my short term goal of buying a house. I would like to bump myself down to a lower tax bracket and tax advantage of tax deferred growth, but realize that since I’m currently above the home buyer withdrawal limit of $20,000, additional dollars contributed to RRSP are dollars that are truly locked in until retirement. This is a good thing, but I need to ensure that I am meeting nearer term goals as well.


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