In the last two years my annual gross income has declined by 34%. Needless to say, I have made some adjustments in my spending habits and my monthly expenses. However, I am in a couple and therefore our household expenses have not changed too much. It is more my personal spending that has been cut.
When you are in a relationship and your income is cut, should your partner also feel the impact?
I know that a lot of people would be happy to make my salary, or in some cases (and more than should be) many people will be happy just to have a job. Money and spending habits are relevant. Some of us wouldn’t blink an eye on spending $50. But if you only have $100 in your bank account, then $50 is a lot of money.
I keep hearing people say that the market and the economy will get better. I would like to know exactly when that will be! If and when the market does recover, Will all of the people who are currently unemployed get their jobs back? Will all of the homes in foreclosure suddenly offer mortgages to their former owners? Of course I am hopeful, but that is just not reality. According to a recent article titled Jobs Gone Forever on CNN Money, they confirm that some jobs may not be returning when the market recovers.
It is said that the average person should spend approximately 30% of their net after tax income on housing and approximately 17% on their transportation costs. This includes insurance, gas, parking, financing and/or public transportation including taxi cabs. Are you within the “norm”? I am not. I spend approximately 39% of my net after tax income on housing costs. I have recently been complaining about the cost of my 2007 Honda Civic. So, it was no surprise to learn that my transportation costs are also higher than the average. I currently spend 24% of my monthly net after tax income on my Honda and it’s associated costs such as insurance, gas, parking, and payments.
LizPulliam from MSN Money believes in a 50-30-20 Budget. This budget allocates 50% of your net after tax income to “Must Haves”, 30% to “Wants”, and 20% to Savings and Debt Payments.
To increase savings capacity Richard Jenkins sticks to a 60/40 budget. He limits his essential spending such as housing, food, insurance, and bills to 60% of his monthly income that will free up 40% of his income into forced savings both registered and non registered.
Some people choose to buy a less expensive house in the suburbs with more square footage. I choose to live in a downtown apartment and therefore I am paying the price for my living situation. As a DINK where do you and your spouse choose to spend your hard earned money? Take this Savy Spending Quiz on MSN Money to find out.
(Photo by K@ja)