Expense

Items which should be entered under Expense

  • You should enter under expenses any current or future expenses that are not related to assets or liabilities. Examples of expenses you should enter here include annual living expenses, rental payments, holidays and new cars.
  • (error) Do not enter as an expense:

    Loan/Mortgage/HELP Debt repaymentsLoan repayments should be entered with the details about the loan. See Unsecured loan, Secured loan or HELP debt (a.k.a Higher Education Loan Programme debt, HECS debt). Based on the data you have entered, Pathfinder will calculate the repayment.
    TaxTax is estimated based on the other information entered.
    Running expenses for an investment propertyProperty running expenses should be entered with the Investment Property.
    Contributions to super

    Non-concessional and concessional super contributions should be entered in the Retirement planning goal.

    Fees for managed fundsFees for managed funds should be entered with the Shares/Managed fund
    Deposits to cash or shares/managed fundsDeposits to cash or shares/managed funds, including regular savings plans, should be entered at the Cashflows & Goals step in the Cash or Shares/Managed fund sections.

    Family home or property purchase expenses

    (e.g. deposit payment, stamp duty)

    These should be entered in the Acquisition costs field under the Family home or Investment Property.
    Life Insurance premiumsLife insurance premiums that are part of the financial advice (i.e. Life/TPD, Income Protection, Trauma), should be entered as Insurance. However, other insurance (such as home and contents, health, car) should be entered as an expense.


How to add an expense

  • To add current and future expenses, go to the Cash flows & Goals step (top menu), then the cash flows sub-step. Find the Expense section, then click the Add Expense button.
  • Make sure you apply the correct expense in the correct correct years. For more information, see How to use the series builder. If you need to add an expense relative to an individual's or dependant's age you may find the Age Lookup table useful.
  • In the Ownership field it is not possible to enter an joint expense. So, for a couple, just pick one individual to own the expense and Pathfinder will move funds between individuals to meet the expenses.  Alternatively, you can divide the expense and make an entry for each individual.

Pre-set values for each expense type

It is important to choose the correct Type for your expenses, since the type you choose affects the tax calculations and other defaults. The following Types have the following pre-set values:

Expense TypePre-set values

Comments

Note that you cannot change the pre-set values, but you can change the type so that your required preset values are applied

Annual living
  • Not tax deductible
  • You can add single entry called 'Annual living' instead of making separate entries for groceries, utilities, eating out, clothes, petrol, etc. Generally, It isn't necessary to enter household and discretionary spending as separate entries, unless they:

    • Stop or start at different times. e.g. an expense that stops after two years should not be conflated with an expense that occurs every year.
    • Have a different frequency (e.g. weekly vs annual)
    • Are indexed by different values
    • Have a different tax status
  • When entering annual living expenses, make sure that they don't include values that Pathfinder will calculate (e.g. mortgage repayments), the full list is above.
  • You may wish to adjust annual expenses to reflect a change in circumstances (e.g. retirement). For more information, see How to increase or decrease a value in the series builder.
Business
  • Tax deductible

You may wish to stop this expense at retirement. For more information, see How to stop a value in the series builder.

Child support payment made
  • Not tax deductible
You should make sure that you stop this expense when the child is no longer dependent. For more information, see How to stop a value in the series builder, you may also find the Age Lookup table useful.
Education
  • Not tax deductible
Initial plan fee
  • Not tax deductible
  • The fee charged by the financial planner for giving the advice. By default this is only applied in the first year of the analysis, but this can be changed by you, if required.
  • This can be paid directly (i.e. by an individual) or out of a superannuation account or SMSF by selecting the right choice in the Owner field.
Ongoing advice fee
  • Tax deductible
  • The ongoing advice fee charged by the financial planner. By default it is applied from the second year of the analysis onward, but this can be changed by you, if required.
  • This can be paid directly (i.e. by an individual) or out of a superannuation account or SMSF by selecting the right choice in the Owner field.
Rent
  • Not tax deductible
  • Only applied if individual does not own a home.

Expenses with the Type as 'Rent' will only be applied in the analysis when a family home is not owned. So it's okay to enter a rental expense for every year, and if a family home is bought or sold during the analysis period, the rental expense will only be applied when the home is not owned. In the year a home is bought or sold, Pathfinder will apply half of the rental expense entered, because it assumes properties are purchased in the middle of the financial year (e.g. if you enter an annual rental expense of $20,000, in the year a home is bought, Pathfinder will assume they pay $10,000 in rent).

For examples, see Family home.

Tax deductible
  • Tax deductible
Any tax deductible expense that does not fit into the above categories.
Tax deductible donations
  • Tax deductible
Tax deductible charitable donations.
Other
  • Not tax deductible

Any non-deductible expenses. This could include one-off expenses such as holidays, car purchases, etc.

Modelling options

Making an expense tax deductible (or not)Choose the correct expense type (see expense types, above)

Increasing or decreasing an expense

(e.g. reducing living expenses in retirement)

You can increase or decrease an expense in later years in the Customise field of the series builder. For more information, see How to increase or decrease a value in the series builder.

Adding a one-off expenseIf there is a one-off expense (e.g. new car purchase), when you add the Expense, fill in the Frequency field with 'One off'.
Stopping an expense

You can stop an expense in the Customise field of the series builder. For more information, see How to stop a value in the series builder

Adding an expense that happens every 2 years (or every 3 years, etc)

You can apply expenses at less common intervals for things such as house maintenance or big holidays. To do this, when you add the Expense, fill in the Frequency field with the appropriate timing, such as 'every 2nd year', 'every 3rd year', etc.

Entering joint expenses

In the Ownership field it is not possible to enter a joint expense. So, you can either:

  • (Recommended) Pick one individual to own the expense and Pathfinder will automatically transfer funds between the individuals, if required. Note that to allow transfers beween individuals, they should be entered as partners at the Individual step.
  • Halve the expense, and make an expense entry for each individual.
Calculating an appropriate time or value for an expense

See Why you can't optimise expenses

Strategy Development Service (SDS) options

If the case includes complex analysis that you are not able to do in Pathfinder yourself, it may need to be submitted to the Optimo Financial SDS. Complexities include, but are not limited to:

  • Cases with incomes that have salary packaged expenses such as meals and entertainment or a car lease

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