Spending Plans (aka Budgets) Part 2
My last blog, Spending Plans (aka Budgets) Part 1, we were privy to the budgeting challenges of my clients, Jack and Jill. You will remember that both Jack and Jill each had some money left over at the end of each of the last four months. Jack averaged a surplus of $133.35/month and Jill averaged a surplus of $155.05/month through the months of February to May.
In the month of June, Jack made the decision to leave Jill. He moved to an apartment and set up a new home for himself. With all the changes in living arrangements, both Jack and Jill’s financial rhythms had to be totally restructured. Some bills will stay the same, others will be duplicated, and some new bills will start for one or both people. Separation and divorce create new complexities that compound the already stressed situation. Here are Jack and Jill’s expenses from June through to the end of August.
Jack’s Monthly Net Income Jack’s Expenses (3-month average)
$7,091.49 Rent $2018.00
Groceries $ 736.00
Dining Out $ 284.00
Cable TV $ 147.29
Electricity $ 286.68
Life Insurance $ 62.62
Monthly Svgs $ 200.00
Truck Pmts $ 890.78
Renters Ins $ 22.24
Monthly Poker $ 177.00
Clothes $ 298.00
Gasoline $ 418.00
Truck Insurce $ 186.19
Furniture Rent $ 327.28
Cannabis/Tob $ 549.34
Camper Trailer $ 487.87
Total $7091.29
(Jack averages a $0.20 surplus at the end of each month)
Jill’s Monthly Net Income Jill’s Expenses (3-month average)
$5,394.43 Mortgage $1327.98
Cable $ 190.68
RRSP’s $1500.00
Toiletries $ 149.84
TFSA’s $1000.00
Nat Gas $ 52.00
Electricity $ 196.00
Housekeeper $ 000.00
Family Gifts $ 000.00
Car Payments $ 656.98
Car Fuel $ 128.24
Home Maint. $ 000.00
Total $5201.72
(Jill averages a $192.71 surplus at the end of each month)
When Jack moved out to live in his own apartment, the net effect of his spending pattern resulted in him living in a high rent complex. The rest of his living costs did not change significantly. The big exception to his costs was the purchase of a camper trailer that will cost him $487.87/month for the next 15 years.
Jill had the capacity to adjust to taking over the marital home costs. She chose to reduce the rate of savings of her TFSA from $1500/month to $1000/month. She also chose to eliminate paying for family gifts ($65/month), she gave up her housekeeper ($210/month) and stopped the home/yard maintenance program ($412.16/month).
Jill is in quite good financial shape because she is quite disciplined in her day-to-day spending. Jill is relatively humble in her needs and was able to make the difficult decisions as to where to cut costs and save money.
Jack enjoys living in the moment and looks to have excitement. He was able to fill the gap in his budget by purchasing the camper on credit.
My job as a financial neutral is not to pass judgement on Jack and Jill’s respective spending decisions. Both Jack and Jill have more work as they proceed toward dissolving their marriage. The costs of splitting assets and paying for the divorce are still to come. Happily for each of them, they have yet to dip into their savings plans to pay for things.
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, clubs and all levels of government.