Recently, it struck me that many of my expenses tend to come in the first half of the year. Here are some expenses that I have to pay in January through June each year:
1. Property Taxes
2. Payroll deductions of CPP contributions and EI premiums (anyone whose income exceeds double the CPP and EI earnings limits will finish getting these payroll deductions before mid-year)
3. Car and house insurance (my renewal date happens to be in the first half of the year, and I pay the full year’s premium in one payment)
In my case, this all adds up to about $11,000 of first half-year costs that I don’t have from July to December. If we toss in the RRSP contribution of nearly $24,000 that I’ll make before mid-year and the resulting reduced payroll taxes for the second half of the year (over $10,000), the imbalance grows to about $45,000! The rest of my expenses tend to be fairly balanced across the year.
None of this causes me much difficulty because I spend so much less than my full income, but it does explain why my savings grow so slowly from January to June. Readers may wish to consider balance across the year when choosing renewal dates for once-per-year costs.
Do you find that your living costs are concentrated in one part of the year?