Monthly Budget & Net Worth Statement
The foundation of any financial planning process is a thorough and accurate preparation of these two elements:
1. Monthly Cash Flow Statement
2. Net Worth Summary.
I prefer to work with monthly "money-in" and "money-out" on the after-tax basis. This way a confusion with money you don't have is set aside.
I have categorized the monthly expenses into major life categories: home, transport, children, financial services expenses, health, essential living, bad habits and discretionary spending.
Tracking bad habits can fundamentally improve your monthly cash flow by eliminating this ever-present $150/month LCBO expense and improve your life.
Tracking financial services expenses can help you to focus on the value you are getting from the banks, insurance companies, pay-per-service professionals.
It's essential to segregate your living essentials and discretionary spending to understand where is the need and where is the want. It will help you to know how much do you need per month no matter what. Your, so to say, bare-bones budget.
For your retirement planning or (I want to quit my job planning), you need to prepare your current budget first, copy it, and modify your "New You" budget. You would do the same with any life changing event: birth of a child, divorce, relocation, etc.
The summary page of your cash flow planning (second sheet) shows the example of savings you can easily find and its annual impact. For many middle-class average Canadians the $10,000 per year is quite achievable.
Good luck with you planning and happy saving!