This is a short little story about a young family attempting to balance family life, work time and finances. I hope you will enjoy it’s simplicity and the saving tips below.
I spent an afternoon with a young couple whose goal it was to get a handle on their personal finances. He was self employed who spent so much time working the last few years, he was missing out of quality time with his wife and kids. His immediate goal was to decrease his hours at work so he could spend more time with his family in order to enjoy the kids and do everyday things like ride bikes and play with the dog.
What would happen when he took that extra day off each week? Was there enough money if he chose to take an extra day off every other week? Being self employed, f he didn’t put in the hours, he didn’t get paid.
This meant that an inventory had to be made of their current spending and spending habits. Compared to national averages, they were spending a bit more on their mortgage, food/family/fun expenses, insurances, and taxes. (See chart below) They were spending less on automobiles, savings, and they virtually had no credit card debt.
We examined their cash flow and talked about short term, midterm and long term goals. For the short term, they decided they would not pay extra on the mortgage and find less expensive ways to have fun and leisure. Reluctantly she decided she would plan the meals around sale items and not just whatever she felt like for the day. I suggested they adapt these new strategies a few months before he reduced his hours. We would set a follow up appointment to discuss other goals and ways to reduce other obligations (taxes and insurance) in a few months.
| U S AVERAGE SPENDING – Out of $5000 monthly salary: | A $5000 monthly income would be | This Family $5000 monthly income existing plan | Solution |
| Housing 20-35% | $1000- $1750 | $1500 | $1250 |
| Family Expense and Food 15-25% | $750 – $1250 | $1000 | $750 |
| Insurances 5% | $250 | $450 | $450 |
| Auto and transportation 10-15% including car debt | $500 – $750 | $200 | $200 |
| Savings 5-15% | $250 – $750 | $200 | $200 |
| Taxes 15-25% | $750 – $1250 | $750 | $750 |
| Other Debt 0-10% | $0 – $500 | $100 | $100 |
| Fun and leisure 5-15% | $250- $750 | $750 | $500 |
| TOTALS | $5000 | $4950 | $4200 |
I was pleasantly surprised a month later when she called me and told me about “no spend Saturdays”. Her 11 year old daughter had come up with the idea. This would be one day where they do not spend any money. It did not have to be a Saturday, and according to the daughter – “they could not drive anywhere because this cost gas.” They found that they could walk to the park with a picnic lunch, read, play games, use their imagination, and enjoy each other and the day. They were doing well within their new spending habits and most importantly, Dad received the priceless gift of time to enjoy with his family
This family found a way to meet financial obligations while getting their most important needs met. It took a little willingness and some smart decision making. One day at a time, they found their own financial freedom and will continue to build on their successes.
Here’s some other ways you can save money this summer:
Driving – The department of Energy reports that there are many things we can do to save money at the pump. They report most cars use more fuel when driven over 60 mph. Also speeding, rapid acceleration, and abrupt stops can burn up to 33 percent more fuel. Keeping your car well maintained can save 4 percent on gas usage and even using the suggested motor oil can save 2 percent. For more information visit http://www.fueleconomy.gov/feg/drive.shtml
Garden: Consider having a plant swap in your neighborhood. Dig up unwanted plants, separate tubers and bulbs. Make a flyer and knock on doors. You can save lots of money, get plants perfect for your environment and meet your neighbors all at the same event.
Food: Say you want a salmon barbeque for dinner tonight. With the cost of fish soaring you may think twice before just running out and buying the freshest catch. Check out www.mygrocerydeals.com to see what is on sale on your favorite store before running out and paying full price. Here in Seattle, King Salmon from Pikes Place market peaked at $38 a pound! Register on this site and see what is on sale before you go to the store. By preselecting sale items you can reduce your grocery bill by 50 percent! So maybe you’ll have pork chops instead of salmon tonight.
Janice is a financial professional and tax preparer in Renton WA. She can be reached at 425-681-1715 or Janice@JBTaxandFinance.com.
*For your electronic copy of a planned spending worksheet email Janice@JBTaxandFinance.com. Make sure your write worksheet in the subject line. Other inquires are always welcome.
