Lifestyle design for 2018 and beyond

There is too much choice and we all suffer decision fatigue. The start of the year is a good time to plan out the rest of the year. Life is too short to spend time shopping – shop as little as possible and have your necessities automatically delivered to you in a biweekly shipment.

Likewise, map out your personal expenditures and set it on auto-pilot.

How do you pay yourself from your Alberta corporation?

Choose one of the 5  options below to transfer from your business account to your personal account each month (set up an automatic transfer through your bank).  And don’t use your business accounts for any personal transactions!  The amounts below are per person.

  1. Personal income of $2500/month = $72.67/month in taxes ($872/year)
  2. Personal income of $3,437.50/month = $204/month in taxes ($2,450/year)
  3. Personal income of $4,167/month = $356/month in taxes ($4,266/year)
  4. Personal income of $5,000/month = $529/month in taxes ($6,347/year)
  5. Personal income of $6,667/month = $884/month in taxes ($10,608/year)
  6. Personal income of $8,333/month = $1338/month in taxes ($16,057/year)

Basic: Keep your monthly personal income below your worst month in 2017, repeat this every year.

If you don’t know how much you will make

  1. Remit the net GST you collect every quarter
  2. Save 12% for your corporate taxes
  3. Save 3% personal tax on the first $30,000 of money you transfer out
  4. Save 14% personal tax on the next $11,000 your transfer out on top of the $30,000
  5. Save 20% personal tax on the next $9,000 you transfer out on top of the $41,000

Protip: Remember everything you pay for outside your corporation really costs you 1.5x more since you would be paying for it with after-tax dollars rather than pre-tax dollars.  Even at 0% interest, you will need to earn more than $1.5 million to pay for a $1million house.

Wealth Composition

95% of your wealth should be safe: Minimum 40% cash + Maximum 35% business interests + 20-25% real estate.

5% of your wealth should be in high-risk investments. Losing 5% will not wipe you out, but it’s enough to efficiently increase your wealth. Once your principal doubles, take back your principal and put it back into you safe mix and re-balance as required.

 

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