Last week I posted about what I would do if my family lost 50% of our income in the form of job loss or some other income-impeding emergency. I feel like this is an important topic to address because many Canadians are not prepared for this type of scenario, even though it happens fairly frequently. I’d hate to think of what would happen if me or my fiancée’s employment status changed, but I know we would be prepared if it did. We would be prepared because right now, we are living on about 50% of our income, with the rest being tucked away in savings, or thrown at debt. If one of us lost a job, we’d stop paying down debt and saving, but life wouldn’t change all that much. This is because we don’t have very many month to month expenses, and our fixed expenses are very low.
Where Does the Money Go?
Last week I walked through what you won’t find on our expenses list. But deprivation isn’t really my thing, and instead of thinking about all of the things I’m not allowed to have, this week I want to go through the things we do like to spend money on.
We have a generous grocery budget. Sure, we could cut back here and there, clip more coupons, and we are slowly scaling back what we spend per month on groceries. But to tell the truth, I don’t want to skimp on grocery costs. If we can’t go out to eat very often, then making a delicious meal at home with high quality ingredients is the next best thing. If we can’t go to the movies as often as we’d like, then curling up on the couch with some first rate and healthy snacks is a good substitute. In addition, I feel that taking care of my health is a top priority, and that means healthy food, not Kraft Dinner. Our household cleaning products as well as things like paper towels, Kleenex, and cat food are all considered part of our grocery budget.
I like my car, I need my car (literally, we live 7km from anything, 30km from a city). It’s a 2007 City Golf, that we bought used. As Cait over at Blonde On A Budget said, there’s a weird bond between a girl and her car. Along with this car comes the insurance for two people, gas, and occasional repairs (thankfully not too many yet).
Included in entertainment is movies, alcohol, bars, restaurants, park admission, basically anything “fun” that doesn’t take place within our home. In Til Debt Do Us Part, Gail Vas Oxlade has mentioned that every family needs an entertainment budget of at least $100/month, otherwise insanity is sure to ensue. Ours is $200/month, which we are able to easily remain within. (Although we’ve already burned through about $100 of ours this month, looks like we’ll be putting the breaks on later this April)
I have an “everything else” budget or “slush budget” if you will. This budget accounts for random purchases that might not necessarily happen every month. Need a new mop? That comes from the everything budget. Want to buy a new book or pair of pants? Take it out of the everything budget. I find this much easier to deal with than trying to make a “household furnishing” budget, a “personal care” budget, and a “books and clothing” budget.
I recently got contacts. Since I’m still working out how much solution I need, and how often I’m going to be wearing them, I don’t have a set expense line yet, but I imagine I will be paying around $25/month for contacts.
And besides rent, that’s it. Pretty simple eh? No cable, no netflix, no land line, no tanning, hair or nails, no gym, no doggy daycare, no pet insurance or obedience classes, no yoga classes, no running club, no on-line shopping, no coffee budget, no iTunes downloads, no landscaper, gardener, pool cleaner, or house cleaner, no property taxes or house insurance, no bus pass or taxi budget, and no massage therapy, phew!
Wants Vs. Needs
There are a lot of things in life you can spend money on, but very little you have to spend money on. My expenses list is very short, because there are better uses for my money right now than going to all of those consumable expenses I listed above (like paying off debt). At some point in my life I’d like to be able to spend money on some of the things in that list above, but right now it’s not a priority. The up side of not having those expenses, is how flexible my budget is, should the worst happen, like having to live on one income.
Do you have a lot of monthly expenses? If you had to live on one income, what would you have to cut? I want to know!
PS – Jeremy over at Modest Money included My Alternate Life on his list of Top Canadian Personal Finance Blogs. There are loads of good blogs featured, I encourage you to head over and check out some great blogs, and maybe vote for a few of your favourites.