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September’s here and the kids are back to school. However, the ritual has changed. That annual pilgrimage to Staples (list in hand, red bins of pencil sleeves, the binder debate. Does anyone remember Five Star zipper binders?) has given way to a supply list emailed in August and a cart checked out online. That said, what hasn’t changed is the comparing.
That instinct or “software” is built into our personal operating systems, and it doesn’t expire at graduation. It just gets a bigger budget, moving to driveways and renovations. So, while students work through percentages and exponents, we’ll spend this month on the input those formulas can’t supply.
The expense profile is one of the most critical inputs of a financial plan (sometimes called the “lifestyle expenses” or “annual spending” inputs). If you Google financial plan inputs, numerous financial advisors and websites will reference the big three assumptions: rate of return, life expectancy, and inflation. The thing about these three, though, is that you don’t control any of them. Your expense profile is the most important input in your plan, and the only one you have your hands on every day. It’s under your direct control and supervision.
In Q Wealth’s portfolio management work, a standard concept called a security screen is used. When building an investment portfolio, screens aim to filter out certain stocks or securities, and they vary depending on what a portfolio manager is trying to isolate. For example, a screen might remove companies with no cash flow, or admit only dividend payers. The point isn’t to find the perfect company; it’s to quickly and unemotionally remove the things that might not be best for the portfolio or fit with the mandate or strategy.
Screens don’t usually show up in financial planning. But we think one belongs there; we think it’s a critical mental model that can have a huge impact. And we call it the “spending screen.” Applied to your expense profile, it is this:
Would you buy it (or spend on it), if no one knew?
That’s the golden spending rule. Imagine no one sees the vehicle in your driveway. Imagine no one sees the renovation, the vacation, the clothes, the cabin, the golf membership, and so on. Would you still write the cheque (or swipe the credit card)?
Now, please note what the rule does not say. It does not say spend less. With that screen, you may still buy luxury, high-quality, or high-expense goods, but if you do, you are spending on yourself. Something you want. You are deriving value for yourself in that purchase, not to impress someone else. The screen filters out one category: spending whose return is measured in someone else’s reaction.
There are those deadly sins they talk about. Arguably, spending to be seen is a form of pride, and its close cousin is envy. Measuring your own life against someone else’s. Charlie Munger put it best at the 2003 Berkshire meeting: envy is “the only [sin] you could never possibly have any fun at.” Seth Godin made a related point in a July blog post. Past a certain point, an upgrade is only selling you the feeling of upgrading. It is easy, as he puts it, to get hooked on “the climb, not the altitude.” Eventually, the best upgrade available is realizing you already have enough.
So, what is the screen worth? The chart below shows two identical households. They have the same income, savings rate, portfolio, and fees, except one directs an extra $1,500 a month toward things other people can see. (We know it’s not perfect; spending on one-time luxury items to impress might not happen month over month, but it’s a simple example of that extra spending).
The Cost of Spending for an Audience
Two identical households. One spends $1,500 a month more on the things other people can see.
HYPOTHETICAL ILLUSTRATION: FOR DISCUSSION PURPOSES ONLY. Both households begin at age 40 with $250,000 in invested assets and $130,000 of after-tax household income, growing 3.1% annually (inflation + 1%). Household A saves 22% of after-tax income each year. Household B saves the same 22% less $1,500 per month of additional lifestyle spending, indexed at 2.1% inflation, and consumes that amount rather than adding it to net worth. Both portfolios earn 4.5% annually, net of fees, compounded once per year with contributions made at year-end. That figure reflects a growth-oriented allocation (20% fixed income, 30% Canadian equity, 30% U.S. equity, 20% international developed equity) built from the 2026 Projection Assumption Guidelines published by FP Canada Standards Council and the Institute of Financial Planning, less 1.3% in assumed product and advisory fees. Inflation of 2.1% is per the same Guidelines. Over the 25-year period, Household B spends approximately $584,000 more than Household A; the remaining difference in ending net worth is foregone compound growth.
Excluded from this illustration: income taxes on investment income and withdrawals, registered-account contribution limits, principal residence equity and mortgage debt, market volatility and sequence of returns, employment interruptions, and changes in savings behaviour. Returns are assumed constant, which no real portfolio delivers. Results are not a projection, forecast, guarantee, or recommendation, and are not tailored to any individual's circumstances. Your own outcome will differ. Speak with your advisor before acting on anything shown here.
Sources: FP Canada Standards Council™ and the Institute of Financial Planning, 2026 Projection Assumption Guidelines (April 2026); Seth Godin, “The hedonic treadmill,” Seth’s Blog (July 13, 2026); Charlie Munger, Berkshire Hathaway annual meeting (May 3, 2003). Hypothetical illustration only; full assumptions, exclusions and disclosures are set out within the exhibit. Figures rounded; for informational purposes only and not investment advice.
That $1,500 takes their savings rate from 22% down to 8% in the first year. Over twenty-five years, they spend roughly $584,000 more, but the gap in ending net worth is just under $1 million. The rest is compounding that never happened. (One more from Munger, “The first rule of compounding is to never interrupt it unnecessarily".)
None of it feels reckless in the moment. A slightly larger house, a nicer vehicle on a shorter trade-in cycle, one extra annual vacation, or the home and “stuff” upgrades that come with a new neighbourhood.
This doesn’t require auditing years of statements. Take your three or four largest discretionary lines of spending and ask it of each: if no one knew, would this still be here? Most people find one or two that don’t survive the screen, and maybe one or two they would defend without hesitation, which is exactly the point. And that is fine because the goal was never a smaller life. Both answers are useful. The goal was never a smaller life.
Which brings us back to that school supply list. Whether it’s filled from a store aisle or an online cart, the question is the same; the screen is the same. Is this needed for class, or is this the one I want because I think someone is looking? As the school year settles in, run the screen on your own expense profile. We’d be glad to look at it with you at your next review meeting. If you’re not a client, contact our office, and we’ll set one up.
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If you’re considering a sale, leasing, or transitioning your farmland to the next generation, this conversation is designed to bring perspective and practical insight. We'll explore some of the biggest decisions Saskatchewan farm family’s face and how thoughtful financial, tax, estate, and investment planning can help preserve what they've built and support future generations.
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