Show Me the Money
Y’all have been very patient, waiting for the numbers I promised at the beginning of the week. When you worked out what you’ve been spending, were you surprised? Think about how you have been managing your money for a minute. Have you been keeping track? Are you aware of where your hard-earned bucks are going? Do you know exactly how much is going where?
According to The Stats Man, the average household spends $53,160 a year. For y’all who don’t make that much, I don’t want you to just shut down and go away. We already know some people make more - and spend more - than others. This is an average. But we also know that how much we make has very little to do with how much we spend; not since the advent of credit. So keep reading.
If you’re a member of a family with two grumps and children, you’re spending even more: $72,030. If you’re a lone female parent, you’re spending $42,060. If you’re a couple over the age of 65, you’re spending $40,390. And if you’re a singleton, you’re spending $29,680.
Surprised by the numbers? Hey, I don’t make ‘em up, I just report them. Since these are averages, there are people who will be below these numbers. But there will also be people who are above - which is what “average” means, right?
So what do you think the average family spends on food? On clothes? On shelter? Do you spend more or less on transportation if you’re a renter? Some of the numbers are counter-intuitive - they’re not what you’d expect. Some just make me scratch my head.
BTW, people are always asking me what they should be spending on food and my answer is always the same: I don’t know. I don’t breakout for these categories because they’re so dependent a whole bunch of other considerations including how much you make and what you’re spending in your other categories. The big breakout I use is for LIFE, into which all these things fall. On LIFE, you should be spending no more than 25% of your net income - unless, of course, you have no consumer debt, in which case you can scoop the 15% from debt repayment and add it to your other categories. See, there’s huge benefit to being consumer debt free: You get to spend more money on the stuff you want.
February 29th, 2008 at 4:58 pm
Or you could add that extra 15% to your mortgage, transportation or savings and retire early.
February 29th, 2008 at 5:53 pm
Yah!
February 29th, 2008 at 6:11 pm
If you add 15% to transportation, you are going to drive a very fun car!
February 29th, 2008 at 6:31 pm
Can you provide a link for where we can find this? I tried to find it on my own but got lost.
Thanks.
February 29th, 2008 at 6:31 pm
…I meant the statistics you’re referring to.
February 29th, 2008 at 7:17 pm
Sorry, Rhys, the likely reason you can’t find it is because The Stats Man charges big-time for the info. I had it as part of a package I got for some research I was doing. From time to time, stuff becomes available for free, so you can keep an eye open. These stats were from the Survey of Household Spending 2005.
March 1st, 2008 at 7:13 pm
I ‘m working on my budget and need some questions answered? I’ve looked but can’t seem to find the answers!!! Where do I put my RRSP contribution in my budget? Does it go under savings? the next question I have do I include my pension plan from work into savings too? What about life insurance, what category does that go under? Thanks in advance.
March 3rd, 2008 at 11:26 am
From what I see, savings are just that…savings…I put my RRSP contribution should be under a separate category….same with pension plan from work.
Here’s what I do:
1) Calculate 10% of my gross income eg. 214
2) Subtract my pension amount per pay eg $103
3) remaining amount dedicated for RRSP x
x = 214-103 = $111/pay into RRSP
Note though..Im paying myself based on my pretax or gross bi weekly pay…some people can’t afford that and still pay down debt..but the short term pains is long term gains….best of luck Sandra….
March 3rd, 2008 at 8:17 pm
Thanks Elvin, My budget is now completed…… Now comes the hard part, living out of the jars…
March 4th, 2008 at 7:58 am
The jars are the easy part, it’s the not purchasing that cup of Timmy’s every morning…..it’s not going out to dinner 3 times a week…the lifestyle change is gonna hit you like a ton of bricks, but let me say, since my fiancee and I started watching Till Debt do us Part and have become Gail-ites….our lives are in balance, all our debts will be paid off in 2 years, our wedding will be funded with cash and we’re buying a new home next year. It’s all possible if you remain focussed and buy what you need, not what you want….well….save to buy what you want.
FYI…my credit card company gave me a courtesy call yesterday…asking if I was okay and everything ’cause I haven’t charged a cent on my card for months…I said that due to crippling interest charges and deciding to stop paying your salary, Im in the process of ridding myself of your company….short pause…well thank you for your comments sir. I love how they freak out when you say you’re gonna stop using credit..it’s like I have leprosy! Best of luck Sandra.
March 5th, 2008 at 9:47 am
The jars are the easy part
Elvin, I am finding over the past weeks and months that statement is very true for me. After doing Gail’s interactive budget, after facing financial realities based on the results of that budget, my strugle is not with the jars but with the spouse that just will not accept change is necessary. I believe I will need to handcuff him to the television. Gail, when will there be a “till debt do us part” marathon so I can get him ready???:)
March 5th, 2008 at 10:06 am
“Spousal support” is key to getting cleared of debt and on your way to financial security. Speaking for my gender…most men are addicted to routines and cannot accept reality that they are fallible. I was like them..down a path to ruin, until I came across Gail on Slice….
My fiancee’s habits were hard to break..she would get a timmy’s every morning on the way to work, 1 during the day, and 1 on the way home..that’s $3.50 easy on coffee. She would also buy magazines like Cosmo every month and blow tons of cash on the latest hair products on the market (she’s a hairstylist ) All that changed when we started watching the show. But of course..she was willing to change.
If you’re husband is still reluctant, I recommend these books - Smart Couples Finish Rich or the Automatic Millionaire…Have him read the McIntyre’s story and if he’s still reluctant to change his ways….do what Gail does…hand over complete control of all the finances to him and tell him to balance everything and still maintain his lifestyle. He’ll quickly learn that a two-pronged approach to living debt free is better than tackling it solo…the rest should fall into place…otherwise….a good kick to his @ss never hurt anyone.
March 5th, 2008 at 11:02 am
Christine,
If you want to watch a lot of Til Debt Do Us Part episodes or just specific ones, go to the Slice TV website, full episodes. Season 2, 3 and current shows are all there (don’t know what happened to Season 1). It’s a great way to get your daily dose of Gail!
Unfortunately, it really be hard for you to get traction on your financial change without your husband being fully on board with you. Try talking to him truly from your heart, that this is really important to you etc. If he tries it for 3 months and really doesn’t like that you are getting out of debt, it’s easy to rack it back up again! If he does get on board, you will experience couplehood like never before! Try inspiring him with “if you’re not stressed about finances, you’ll be a happier wife”.
Good luck to you.