In order to provide a comprehensive budgeting tool, we thought it would be a good idea to provide a sample budget to follow. This sample budget, as shown in the Zolo Housing Budget Template, provides benchmark costs associated with managing and running a household in either America or Canada.
To find these baseline costs, we had to investigate how much the average Canadian or American spends on each housing category or housing expense. The results were surprising.
If you’d like to know how we calculated these benchmark costs, continue reading. We include an overview of each line item in the monthly housing budget, explain how the numbers are determined, and include tips on how to modify the averages to more realistically reflect your costs.
Monthly Income
According to data from Statistics Canada, the average median after-tax income for families in 2017 was $59,800. We understand that this average may not reflect your particular circumstances, but we use this average (and similar data from Statistics Canada) in order to create a baseline.
Based on these calculations, and the assumption that annual income rises, on average, by 1.5% per year, we estimate that the average after-tax income for families in 2019 is $61,590.
As a result, we calculated that the average monthly after-tax income is $5,133.
We did not include an average for other types of income. Our assumption is that not all Canadians obtain income from investments, rental properties or from a side-hustle. However, for those that do earn this extra income, there are line items included to help you capture this data.
(For Americans, the median salary in 2018 was $61,858, according to Sentier Research. With an annual raise of 1.5%, this puts the average annual salary at $62,786 USD or $5,232 per month after tax.)
Direct Expenses
Mortgage / Rent
It’s hard to create an average mortgage or rent for all of Canada, since it’s a vast country with plenty of variables for housing expenses. But try, we certainly did.
To minimize errors, we sought out credible sources who had attempted to calculate a monthly average mortgage paid by Canadians. According to an article published in August 2018 by Better Dwelling, the average mortgage payment for Vancouver homeowners was $1,794, while the average mortgage payment for Toronto homeowners was $1,662 and the average Montrealer was paying $1,060. Based on this (and the extremes introduced by these three cities) we use an average monthly mortgage payment of $1,505.
For those renting, we grabbed an average monthly rental price from PadMapper of $1,558 per month, as of October 2019. We chose to use the average of a two-bedroom apartment, based on the average rental costs for 24 major cities across Canada, as recorded by PadMapper. The decision to use the two-bedroom data was because we believe it captures a more realistic average rental cost for most Canadians.
(For Americans, the median monthly mortgage payment is $1,030, according to the latest American Housing Survey from the U.S. Census Bureau, while the average rent is $1,405 per month.)
Hydro / Electricity
To calculate average hydro costs, we turned to Hydro Quebec. For years, this provincial public utility company has been tracking the average electricity costs and consumption rates of residential properties, as well as small and large businesses in major cities across North America. Based on Hydro Quebec’s most recent report released in April 2018, Canadians paid, on average, $131.57 for their electricity consumption each month.
For Americans, the average monthly cost of electricity is just under $110 USD.
Heating
Not all households use natural gas as their source of fuel for heating their home, however, it is the preferred method with 56% of homes using natural gas as their primary heating source, according to data collected by the Canadian Gas Association.
As such, our average heating cost is based on the average consumption rate of natural gas each month. According to data collected by Canada’s National Energy Board, the average monthly usage in Canada is 7.37 gigajoules (based on the average usage of 88.4 gigajoules per year in 2014).
Given this usage, the Canadian Gas Association reported that the average cost for using natural gas in 2017 was $1,393, or $116.09 per month.
Americans pay, on average, about $82 USD each month for heating, according to the U.S. Department of Energy.
Water / Sewer
There were some costs we found very hard to create a Canada-only average for, and the cost of water usage was one of them. When we ran into this stumbling block, we turned to our U.S. cousins. While not all costs translate, we can assume that some costs are fairly equal, such as the cost of water consumption.
For this reason, our base cost of $40 per month is based on the estimation provided by Howmuch.net and supported by Move.org.
Trash / Recycling
We ran into the same issues when trying to determine a national average for trash and recycling costs and, once again, our solution was to use an inexact but decent approximation used by Move.org, which gave us an average monthly cost of $16.
We feel relatively confident about our estimated costs for water, sewer and trash collection, based on the estimates provided by other notable sites that have also attempted to provide cost estimates for homeownership.
House/Tenant Insurance
According to a JD Power survey, average homeowners insurance ranges across the country. A typical homeowner policy will cost $960 per year for a Quebec homeowner, while a homeowner in Atlantic Canada or in Ontario can expect to pay $1,284 per year, on average. Move west and you’ll find that homeowners in the prairie provinces, as well as B.C. residents, are paying $1,200 per year in homeowner’s insurance. For our purposes, we used these figures to create a Canadian average insurance cost of $95.67 per month.
If you’re a tenant, you’ll find the average monthly cost for tenant insurance drops your monthly cost significantly to $23 per month. According to Ratehub, this is the average cost for tenant insurance.
Keep in mind, however, that both these monthly costs do not take into consideration additional insurance coverage for collectables, expensive sports equipment (such as snowboards or mountain bikes), or expensive jewellery or artwork. Nor do these average costs take into consideration additional coverage for home-based businesses. If you do need these extra coverages, be prepared to add at least another $10 per month, possibly more, depending on the coverage you need.
For American homeowners, the average homeowner insurance cost is just over $1,130 USD.
Emergency Fund
While there are no averages of how much you should save as an emergency fund, there are general rules of thumb. Most experts will say that you should save between three and nine months worth of expenses. But does that include all expenses or just the basic necessities?
Also, how quickly should you save that money? For instance, if you were starting from scratch and needed to save $12,000 for a “proper” emergency fund, it would require you to set aside $1,000 each month, probably in a just-slightly-above-inflation “high-interest” rate savings account. For many Canadians, that’s a hard pill to swallow.
So, we tried to find a nice, happy, middle-of-the-road solution. We used the RBC Emergency Fund calculator to get a total fund amount, based on the average monthly earnings we listed in Section A. Based on these calculations, we’d need to save $15,399 as our emergency fund.
Then, we calculated how much we’d need to save based on five years of committing funds to this emergency account. Why five years? Because it gives us a manageable, monthly saving commitment that isn’t too hard to achieve. For our budget, that means saving $256.65 each month. This sum should be consistent regardless of whether you rent or pay a mortgage.
For Americans, this cost goes up slightly to reflect the higher earnings, to about $257.73 USD.
Maintenance
The general rule of thumb is to set aside 1% to 3% of your home’s purchase price as a maintenance fund. For a home that costs $500,000, that means setting aside $5,000 to $15,000 per year — that’s $416.67 to $1,250 each month!
That’s just not realistic for most homeowners, not after factoring in groceries, transit costs and childcare, none of which are part of this monthly housing budget!
Instead, we suggest setting aside a percentage of your monthly mortgage or rental costs. In this case, we suggest setting aside 10% of this monthly cost as part of your annual maintenance fund. If, by amazing circumstance, you don’t end up dipping into this contingency fund, it will mean you will have set aside about $1,800 as a maintenance fund — more than enough to pay for an emergency appliance replacement or a sizeable down payment on a new furnace, A/C unit or roof repair.
For Americans, the amount to save decreases to $103 USD per month set aside for your home maintenance fund.
Property Taxes
Property taxes vary quite dramatically across Canada. To establish a baseline we used the average property tax rate of 0.4385%, based on the property taxes of 25 major cities across Canada. Assuming the assessed value of the property is $500,000, this would calculate your annual property tax at approximately $2,193.
Americans pay significantly less in property taxes. Of the 50 states analyzed, Colorado takes the “mid-spot” with $1,381.92 paid in property taxes each year.
Strata / HOA / Condo Fees
Strata or Homeowner Association fees (HOA), also known as condo or maintenance fees, are calculated based on a formula. Part of the formula takes into consideration the total square footage of your unit, and how much that unit takes up of the building’s overall square footage (including common areas). Other factors included in this calculation include where the unit is located, with units on higher floors commanding more “value” and, as a result, a higher strata fee. This is one reason why condo fees, even for unit-owners in the same building, are not always the same amount. It’s also why it’s so hard to find an average monthly fee for strata or condo fees.
Since our initial base budget is based on a single-family home, we did not include an average cost for this budget item, however, we did include the line item for those that do live in communities with HOA fees or those who live in townhouses or condos.
If you’re a first-time buyer and want to get a general sense of how much to include in this line item, consider what National Bank reported about average condo fees. In October 2018, the bank released a report that stated average monthly condo fees in the Greater Toronto Area were $0.65 per square foot. For a 594-square-foot, one-bedroom condo, this would mean a monthly condo maintenance fee of $386.60 per month. For a two-bedroom, 956-square-foot unit, this monthly cost jumps to $628.02 per month. For those looking to purchase a three-bedroom unit or a condo unit that is around 1,355-square-feet, the average monthly condo fee is $881.20 per month.
But we don’t all live in the GTA. Those living in cities with more reasonable housing costs can extrapolate from the costs calculated by the National Bank for average condo fees in the Greater Montreal Area. According to the National Bank, condo owners in Greater Montreal paid closer to $0.20 per square foot, on average, for monthly condo fees. Based on these figures, a one-bedroom condo would cost about $119 per month, a two-bedroom would cost about $190 per month, while a three-bedroom unit would cost $270 per month.
If you are interested in a specific unit and want to get a better idea of how the condo fees rank, compared to the above averages, simply ask for an information sheet that shows both the monthly maintenance fees as well as the unit’s square footage. Divide the cost by the square footage to get the square foot cost. If it’s widely out-of-line with the averages we’ve provided, start asking questions: What’s included with this monthly maintenance fee? Have any special assessments occurred recently? The key to assessing whether or not condo fees are realistic is to find out how they rank when compared to other, similar buildings. The more you know, the easier it is to make these assessments.
According to Investopedia, HOA fees can range between $100 to $700 USD per month, but the average cost for most U.S. homeowners is $200 USD per month.
Direct Expenses With DIY Options
Remember, these expenses may include activities that you can do yourself. But for the purposes of the template, we’ve calculated the cost of paid services.
Lawn and Garden Maintenance
A yard is an integral part of your home’s defense system against the elements. Want to avoid big repair bills on that cracked foundation? Make sure your yard is graded properly, so that no soil is touching your home’s foundation and that your yard can quickly and efficiently wick water away from your home.
While many Canadians take on yard maintenance as part of their weekly or monthly routine, many others opt to pay for regular upkeep. If you’d rather budget for a professional, use this line item to anticipate this cost. Of course, the actual cost of yard maintenance will vary dramatically based on a number of variables such as where you’re located, climate, yard size, and type of maintenance required.
To start, we opted for the basic, standard package: A season of mowed lawns that are no larger than 2,000-square-feet, a minimum of two visits per month, as well as lawn-edge trimming, flowerbed and garden clean-up (in the fall), debris removal (approximately 5 bags, extra costs for more bags) and spring prep and clean-up the following year. All this should set you back about $140 per month.
For American homeowners, expect to pay about $133 USD per month.
For those interested in landscaping, please note that we do not include these as monthly costs, as landscaping is more of a renovation/home improvement project.
Snow Removal
Not everyone wants to shovel snow, and for those looking to offload this task onto a service company, expect to pay about $42 per month for basic service (or about $500 per season). Of course, like with most housing expenses, this cost will vary quite dramatically depending on the size of the driveway and the walkways to be cleared, and where you are located.
Americans actually pay a bit more for snow removal with an average monthly cost of $110 USD. The good news is that most Americans will only need to budget this cost for six months, meaning the amortized cost of this service is closer to $55 USD per month.
Gutter and Eavestrough Cleaning
Cleaning the gutters and eavestroughs can be a simple job or it can be downright dangerous — just ask the homeowner of a three-story townhouse that’s easily 35 to 45 feet above ground level. For those looking to offload this twice per year task, budget about $225 for each visit for a two-story home (less for bungalows, more for three-story homes).
American homeowners can budget $156 USD for each visit. Other factors that impact the cost include excessive leaf and debris build-up, a larger than standard linear footprint and awkward roof lines.
Chimney or Firebox Inspection and Cleaning
There’s nothing better than the sound of a crackling fire on a cold winter’s night. For homes that enjoy the use of a wood-burning fireplace (or a boxed insert, otherwise known as a firebox), you’ll need to budget an annual inspection and cleaning at an approximate cost of $250.
The price can go down for each chimney or firebox you add. Don’t skimp on this annual maintenance or you’ll end up paying a much higher maintenance bill to have the creosote build-up (the toxic oil residue that’s left on the walls of your chimney after burning wood) safely removed.
Furnace Filters
A simple way to get the most out of your furnace is to change the furnace filter once every three months, minimum. Since many furnace filters are sold in a two-pack, we anticipated an annual purchase of filters that would then be used throughout the year. While some furnace filters can cost hundreds of dollars for just one, most fall in the range of $12 to $25 per filter. For our baseline, we took the average between the basic and the best and then amortized the cost over 12 months.
Furnace and Hot Water Tank Inspection
Most furnace mechanics admit that any furnace less than a decade old typically only needs an inspection by a qualified professional once every two years. Once a furnace hits more than 10 years old, however, you should either consider a protection plan or getting a robust (ie: thorough) furnace inspection. When shopping for protection plans for later-life furnaces, keep in mind that many repairs are not actually covered, so make sure you weigh that against the possible out-of-pocket cost of a potential repair.
For our baseline budget, we budget for an inspection once every two years, assuming your furnace is under age 10. Of course, if this isn’t the case, please adjust the costs accordingly.
We also included the hot water tank inspection in these costs. While hot water tanks aren’t too difficult to inspect, most people don’t feel comfortable — not a bad thing considering you’re inspecting a large metal canister containing scalding hot water. To get both the furnace and the hot water tank inspected at the same time will save you about $50, at an average cost of $250, plus tax, for each inspection. When amortized over 24 months, that cost works out to just under $11.
Heat Pump, HRV, or A/C Inspection
Like your furnace, you should have a licensed technician test these large home appliances at least once every two years. (Increase the frequency as the units age.) Most firms will inspect heat pumps and A/C units together for about $250, plus tax. Adding an HRV inspection will cost another $250, plus tax.
Septic Tank / Well Costs
If your home is on a septic system, you’ll need to budget for a tank pump-out every two to five years (depending on the size of your tank and the number of people/fixtures in the household). Assuming average use and size, you can budget $521 per pump out, every two to three years.
Indirect Expenses
Household Cleaning Supplies
According to The Nest, the average American family spends $600 each year on cleaners. This includes laundry detergent, window cleaner, toilet bowl detergent as well as floor cleaners, trash bags and hand soap. Translated into Canadian dollars this would mean a family household spends $66.97 per month on cleaning supplies (based on an exchange rate of $1.34).
This seemed a bit high to us, so we dug a bit deeper. According to Emma Bedford, a writer at Statista.com, the average Canadian household spends $213 per year on cleaning supplies, or, approximately $18 per month.
Pest Control
Nobody enjoys sharing a home with unwanted roommates, particularly when those roomies are more commonly referred to as “pests.” When dealing with mice, rats, wasps, cockroaches, silverfish or spiders, expect to pay about $250, on average, for a treatment that should come with a six-month guarantee.
If you’re dealing with raccoons, skunks or squirrels, you’ll need to increase that cost to about $360 per treatment. If you’re really worried and need to treat both insect and animal pests, you’ll need to budget $710 for a six-month pest-free guarantee.
Discretionary Expenses
These are the monthly bills that aren’t necessary, but can make your home a much more enjoyable place to spend time.
Home Phone (Hardline)
Do people still pay for hardline home phone service? Yes. According to the Canada Radio and Telecommunications Corporation (CRTC), the federal agency tasked with monitoring and policing different communication, 67% of households still have a landline. The average monthly cost for this landline is $27.50 (about a third of the price of the average monthly cell phone bill).
In America, less than half (46%) of homeowners still have a landline. Those that do, pay handsomely with the average phone line costing $42 USD per month.
Subscription Costs
Subscription costs are a variety of monthly or annual costs that include video or TV-streaming services such as Netflix, music streaming services such as Spotify, as well as gaming subscriptions, cable television or satellite costs, and other subscriptions that are purchased primarily for use with the home (such as Amazon Prime, delivery of grocery items, Costco membership, etc.).
For our baseline exercise, we chose to include the most common/popular services and use averages collected by industry experts. For instance, the cable television monthly cost of $53.75 comes from that 2016 CRTC report, while Netflix and music costs are derived from the most popular subscription package offered. For gaming costs, we went with the $10 per month that most gamers would pay for either PS4 or Xbox Live online gaming subscription.
If there aren’t enough lines you can always lump similar costs together or add more lines.
Internet
Although many would argue that the internet is an absolute necessity, according to the CRTC, 87% of Canadian households have internet service. The average cost of this service is between $49.50 and $55.
In America, the average cost of a monthly internet service package is $66 USD.
Cleaning Service
For those interested in hiring (or keeping) their cleaning service, we’ve included it in our baseline budget. To get our monthly cost, however, we went back to a 2016 MoneySense article that calculated the average hourly rate a Canadian should be paying a cleaner. Turns out the “perfect price” is $30 (with inflation, that’s now closer to $31.20), but don’t expect to get your entire house cleaned for under $32, because that perfect price is for each hour of cleaning. For most 2,000-square-foot homes, expect to pay for at least six hours of cleaning each month, which translates into a monthly cost of $187.20.
For Americans, the average cleaner will cost $167 USD per month.
Home Security / Alarm System
Like most budget items, there are a lot of variances when it comes to estimating the cost of a home security system. Is the system already in place and you’re just assuming the monthly monitoring? Or is it new and you’re purchasing the system? Or perhaps leasing the system?
For our baseline, we chose to include only the monthly monitoring fee, which ranges from $15 to $35 per month. As such, we used a monthly cost of $25 for our budget.
Americans can expect to pay a bit more. While some services cost $10 per month, some go as high as $100 per month USD. After factoring in all the different types of services — from panic buttons to surveillance and chip-monitored services — we calculated that the average home alarm system would cost just under $48 per month USD.
Propane
If you live in a home that allows for outdoor grills, then chances are you’ve got one and you use it. Perhaps, quite a lot. Turns out the cost of propane, while not hugely significant, can certainly tack on a few dollars here and there to the monthly budget.
To help you plan for this household expense, we found calculations and research, where others had completed the potentially complicated math to figure out how long a propane tank lasts and how much it would cost you to refill that tank based on average annual use. Based on these calculations, a 20-lb tank should last about 10 hours (based on a 40,000 BTU output). Given that the vast majority of homeowner BBQ only once per week (according to CNN, only 5.5% of North Americans will grill more than once per week) and the grill will be in use for about 90 minutes, this means a standard 20-lb propane tank should last you six to seven weeks. Since grilling season is, theoretically, between April and September, then the average grilling homeowner will need to refill their tank two to three times, at an approximate cost of $25 each time.
Firewood
It’s quite possible to find and burn wood for free, but for homeowners who want a cleaner, better burn in their chimney or firebox, it’s best to budget a firewood purchase from a reputable dealer. Dealers that specialize in firewood will often cut pieces to fit your firebox and always make sure each cord is seasoned and dried appropriately. For most smaller homes, a full cord will last about four months, at a cost of about $435 plus tax.
Pool Heater, Pump, and Filter Inspections
Excited that you bought a home with a pool, or just recently installed a pool? You should be! Pools are a great way for the family to enjoy downtime. But one item that shouldn’t be left unchecked is your pool’s heater and filter. Plan to pay about $200 per year for an inspection, more for any repair costs. For a basic pump and filter inspection, plan to pay about $230 plus tax.
Keep in mind that you may have to book these two inspections with different companies — typically your natural gas supplier and service provider will take care of the heat pump, while pool specialists will deal with the pump and filter inspection.
Zolo Housing Expenses Template gives you control
Now that you can appreciate where we obtained our benchmark housing-related costs, both for American and Canadian homeowners and renters, it’s time to download this housing expenses template spreadsheet and set your own budget. Use the benchmarks as a guide. When you have exact figures, enter them into the appropriate expense categories (don’t forget to select the payment frequency in the drop-down menu). If you’re unsure of a cost — and let’s face it, being new to homeownership often means uncertain financial expenses — use the benchmarks as a starting place.
