Question: I am a senior who has always lived below my means. I have purchased a house for cash in a nice area where the taxes are high. Although I can pay for the upkeep I am wondering if there is a rule of thumb which would tell one what percentage of your assets you can afford to spend on a house. What percentage of your annual income can one afford to spend on running a house?"

Answer: It's not possible to give a definitive answer to this question as little is known about your financial details. But several financial professionals have weighed in to share some general guidelines.

One concern, Leon Lau, a financial planner, believes you should remember is that a house is not an income-producing asset.

"For someone living on a fixed income [which might be your situation] you want to ensure that you have enough income being generated from your assets so that your current lifestyle will be sustained," Mr. Lau says.

As to the first part of your question, Adrian Mastracci, a financial advisor with KCM Wealth Management in Vancouver, says the value of your home shouldn't represent more than 50% of your assets. If it's more than that, for Mr. Mastracci, it's red-flag time.

"Ultimately, you're going to have to have assets to provide an income. As you go toward retirement, if you have it at 50% you might have some difficulty," Mr. Mastracci says. "It would be nice to keep it in the 35% to 40% range if at all possible."

David Fox-Revett, a certified financial planner, notes that the amount of assets tied up in your home can vary depending on where you live. For example, in Mr. Fox-Revett's experience it's not unusual for individuals living in the Greater Toronto Area to have their house represent anywhere from 50% to 60% of their assets.

Of course, Toronto is one of Canada's more heated housing markets. In a less active market, lower prices would allow you to lock up less of your assets in housing.

As to how much of your income should go to running a house, Mr. Mastracci says, "The 30% area would be reasonable for a lot of people."

However, Mr. Mastracci is leery of percentages.

He favours plugging numbers into a household finances sheet to see what is going out on an annual basis. Then, it is possible to figure out what you are spending money on, what you can and cannot afford and what you need to "rejuggle."

For Mr. Fox-Revett's part, he thinks you should only be spending about 20% of your pre-tax gross income to run your home because you are a senior, possibly on a fixed income.

"Otherwise you've got an asset that consumes most of your capital."

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.