Your Family Income: Some Real Budget Models

What follows is a selection of budgets from families with different levels of income. Each household budget presented here sets aside enough money to take care of the family’s needs, with a lot of attention paid toward debt and  savings. A miscellaneous item provides a modicum of breathing space for unforeseen expenses. Finally, each budget is merely a snapshot in time: as incomes, needs, and wants change, so should the budgets to meet the situation. Total debt burden shouldn’t eat more than 20% of the take-home pay; housing (rent, housing loan) should eat up no more than 30%.


NET INCOME: P25,000/mo.
EXPENSE CEILING: P22,500

Meet The Single Parent
Mom is a mid-level manager at a small PR fi rm and lives with her parents (who attend to her toddler while she’s at work). Luckily, she has no credit card debt; but she vigilantly puts away savings for her child’s preschool tuition in a few years.


How Single Mom Saves
- Mom’s company-subsidized HMO covers dependents. She swears by the Department of Health’s Botika ng Bayan program, where medicine is priced much lower compared to major drug stores.
- Mom has a company subsidized cellphone and never exceeds the maximum amount to be shouldered by the office.
- Rides FX to work, with occasional cab rides for days out with child, market/grocery trips, etc.
- Mom does without cable TV and doesn’t need Internet access for her child’s school research yet.
- She uses the office Internet during lunch break for personal emails, online surfing, and some YouTube entertainment.


INCOME: P35,000/mo.
EXPENSE CEILING: P31,500

Meet Couple A.
Mom is a secretary at an ad agency, Dad is a graveyard-shift call center agent. They have a preschooler and a toddler. Since Dad’s home during the day with the toddler and leaves for work a good three hours after Mom comes home, the couple don’t need a yaya.


How Couple A Saves
- Company-covered medical plans provide discounted doctor’s fees for dependents.
- Family movie dates are no more than once a month.
- Mom gets her distressing fix at home through an incense burner and hubby’s massage-capable hands, not at a spa.
- Instead of getting separate phone and Internet packages, Couple A took advantage of PLDT MyDSL’s Plan 990 Internet + phone line combo.
- It’s public transportation for Couple A; cab rides are reserved for the once-a-month family movie dates.
- Their eldest’s preschool is walking distance; Dad brings the child to school, with toddler tagging along.

Here are more real family income models.


NET INCOME: P70,000/mo.

EXPENSE CEILING: P63,000

Meet Couple B.
- Mom’s in her mid 30s with two healthy gradeschoolers.                                                                                             - The family lives at her in-laws’ large, comfortable house in Marikina.                                                                 - Mom supplements Dad’s takehome pay (he’s an engineer) through freelance writing.                                   - Their monthly household budget comes down to P40,000.                                                                                       - Breast cancer is common in Mom’s family, so she sets aside a chunk of the budget to pay for health and life insurance.

How Couple B Saves
- Dad has company subsidized cellphone, while Mom uses web-based text messaging and YM with Voice for voice calls.
- Mom, conscious of high banking charges levied on repeated ATM withdrawals, withdraws only twice every month (every pay day), and only at her bank’s ATM.
- Mom has a Makro membership—so she buys her groceries in bulk.
- Dad’s company’s health insurance provider also covers dependents, giving huge savings for the kids’ pedia visits.
- Mom transferred her credit card debt to a personal bank loan with lower interest rates, payable in 12 months.
- Mom goes for generics when it comes to clothes, vitamins, basic medicines, and school supplies.


NET INCOME: P50,000/mo.

EXPENSE CEILING: P45,000

Meet Couple C.

- Mom runs her own home business, Dad is a call center senior trainer.                                                                   - They have one househelp to help Mom with housekeeping and with their two gradeschoolers especially when it’s peak season for Mom’s business.                                                                                                                           - The couple put up about P50,000 a month for their household budget; and while Mom is worried about utility bills, she can’t drop their broadband Internet connection which she uses for her business.

How Couple C Saves
- Dad has a company subsidized cellphone; Mom has a prepaid cellphone account but barely uses it, maximizing web-based text messaging and YM with Voice for voice calls.
- Grandpa (Mom’s dad) is a pediatrician—so free treatment for the kids!
- The family goes on one big out-of-towner a year instead of spending in dribs and drabs (eating out, weekend movie dates, etc.).
- The couple have a joint savings and checking account for day-to-day expenses, as well as a joint savings account locked up in a mutual fund, where returns are greater.
- The family uses the aircon on weekends only.


Buying Your Own Future
What do these budgets have in common? For one, savings are treated as an expense, and debt is kept at a manageable level. Beth Kobliner, author of Get a Financial Life!, enumerates a checklist of main expenses that should get extra attention on any budget:
- 20% OR LESS FOR DEBT - Total debt burden should never eat up more than 20% of the couple’s take-home pay. This includes credit card debt, auto loans, and other lines of credit into this category.
- 30% OR LESS ON HOUSING - Total housing should eat up no more than 30% of the couple’s monthly take home pay. This includes rent, housing loan, or mortgage payments.
- 10% ON SAVINGS - Savings are essential to every budget, and Kobliner suggests you put away at least 10% of your combined take-home pay every month. “It’s critical to think of your savings as a fixed monthly expense that’s part of your budget,” says Kobliner. “While there’s no magical reason to save exactly 10%, the money you set aside [can meet long-term] goals as well as [subsidize] a retirement plan. If you can save more, you definitely should.”


SOURCE:
Beth Kobliner, Get A Financial Life