Spending Plans (aka budgets) – Part 1
It is common sense that to get ahead in life we need to live within our means. The definition of “means” is simply our income, be they wages for our work, income from investments and any government benefits such as Old Age Security.
When couples separate and divorce, it is a requirement for each person involved to show their income and expenses so that support can be properly calculated. In a recent case with which I have been involved, both the lady (Jill) and the man (Jack) had difficulties determining their respective incomes and expenses, before the split up. I had to explain the best way to think about income was the amount of money deposited because the terms “gross” income and “net” income were not clear to either of them. We also had to explain what “fixed” and what “variable” expenses were as well.
The way we helped them individually was to have them find their respective bank and credit card statements for the past 4 months. We identified the recurring money deposits that each of them had and had them write down that amount in one column in a notebook. We then looked at their spending or withdrawals during each of those months and listed them in another column. We were able to find the recurring expenses and identified them as either “important” (fixed) and those things that were “nice” but not vital to their welfare (variable). Here are Jack and Jill’s average incomes and expenses for the months February through May.
Average Monthly Income and Expenses: February to May 2024
Jack’s Monthly Net Income Jack’s Expenses (4-month average)
$7,091.49 Mortgage (PI) $1,327.98
Groceries $625.48
Dining Out $319.66
Life Insurance $ 62.62
Monthly Savings $200.00
Truck Payments $890.78
House Insurance $147.18
Monthly Poker $129.16
Clothes $428.16
Gas for Truck $368.18
Trk Insurance $186.19
United Way $50.00
Home Furniture $1,698.87
Cannabis/Tobacco $523.88
Total $6,958.14
Jack has on average, $133.35 left over at the end of each month.
Jill’s Monthly Net Income Jill’s Expenses (4-month average)
$5394.43 Cable $190.68
RRSP’s $1500.00
Family Toiletries $278.19
Short-term TFSA $1500.00
House Taxes $368.00
Natural Gas $52.00
Electricity $196.00
Housekeeper $210.00
Family Gifts $65.00
Car Payments $656.98
Car Insurance $211.56
Car Fuel $98.91
Home Maint. $412.16
Total Expenses $5239.38
Jill has on average, $155.05 left over at the end of each month.
In Part 2, we are going to look at their respective spending plans after Jack and Jill split up in June.
Note: I am in favour of marriage! Healthy and happy families are the primary units of a strong and vital society and should be encouraged to thrive by everyone… individuals, families, churches, community groups, and all levels of government! Like all noble endeavours, it takes hard work, sweat and tears to make something beautiful and worthwhile! If divorce is the route a couple takes, then make the break clean, quick, and efficient… your financial future depends on it!