Family Finance
That's the title given to a regular item appearing in each issue of the Financial Post Magazine. It's become a fascinating read whenever the magazine is issued. The March 2009 edition no less so than the previous examples of people whom good fortune has given the opportunity to live fairly lavish lifestyles, yet for whom managing their generous incomes is a conundrum.
Invariably, the article follows the lifestyle choices and living arrangements of families earning significantly more in annual wages than the representative ordinary Canadian. Their spending habits are carefully profligate. If that seems an absurd declaration, so does their dedication to the careful apportioning of disposable income toward consuming in a way that appears to the careful householder's opinion the antithesis of thrifty.
And, truth to tell, when reading one of these installments it's my habit to run my socially appraising eye through their "financial snapshot", at the expenses, to evaluate how much is spent on charity, as opposed to total income and other expenditures. There are occasions when I'm pleasantly surprised, others when I feel disgruntled that such well-remunerated families give not a cent to charity.
And this last example fits neatly into that category, of people whose income is generous but whose charitable giving is non-existent. This is a couple in their mid-30s with two children between ages five and three. They own a $675,000 house in Toronto, employ a full-time nanny, enjoy regular family vacations, and spend a whopping $18,500 annually on 'entertainment and eating out', a figure that doesn't include vacation expenditures.
As good parents they have hired a tutor for their older child. Both parents work; his annual income is $120,000 generously augmented by an annual bonus of $40,000 to $50,000. The wife and mother earns a salary of $36,000. Which places them, earning-wise well above even middle-class earners in Canadian society. But whoops! worries about whether he will receive his normal bonus this year may dump them into a lower-earning classification and that worries them greatly.
They consider themselves to be living comfortable middle-class lives, now, however in direct peril as a result of the general financial slowdown and his particular industry's decline (his company finances real estate and construction projects), forcing them to consider lowering their expectations for their happy lifestyle, and impinging on their savings toward their retirement goals.
They have $20,000 on credit cards, dine out weekly, and spend $1,200 a year on bottled water. Bottled water? A minimum of $1,200 to charity, given their income, would still not identify them as generous supporters of charitable needs, and yet they budget nothing whatever for charitable giving. Whereas vehicle leases and maintenance cost them $13,1800 yearly and insurance another $4,900.
They've recently paid $40,000 for a kitchen renovation, not the complete one the wife really wanted, but rather something she settled for instead of the full renovation she really desired. And she has plans to set aside $10,000 a year for continuing home renovations. They don't feel as though they're particularly extravagant, simply paying for essentials.
The wife's salary comes from her interior decorating business, and given the recent economic downturn she has expectations that her business too may suffer a downturn. On the other hand, they've done very well, haven't they, having invested $9,000 in RESPs for their children's future education, and $130,000 in RRSPs.
The potential loss of his bonus, and a downturn in her business may, sadly, lead to their having to seriously contemplate some life-style adjustments. The experts who evaluate their situation have some recommendations; cut their vacation spending by two-thirds to $2,000. Reduce dining and entertainment expenses by 50% to save $9,000 a year.
And wean themselves away from the $1,200 annual bottled water habit. Along with a litany of other proposed savings; purchasing outright used cars rather than leasing; consider one car instead of two; reduce RRSP contributions and pay off the expensive credit card debt.
We should have such worries.
Invariably, the article follows the lifestyle choices and living arrangements of families earning significantly more in annual wages than the representative ordinary Canadian. Their spending habits are carefully profligate. If that seems an absurd declaration, so does their dedication to the careful apportioning of disposable income toward consuming in a way that appears to the careful householder's opinion the antithesis of thrifty.
And, truth to tell, when reading one of these installments it's my habit to run my socially appraising eye through their "financial snapshot", at the expenses, to evaluate how much is spent on charity, as opposed to total income and other expenditures. There are occasions when I'm pleasantly surprised, others when I feel disgruntled that such well-remunerated families give not a cent to charity.
And this last example fits neatly into that category, of people whose income is generous but whose charitable giving is non-existent. This is a couple in their mid-30s with two children between ages five and three. They own a $675,000 house in Toronto, employ a full-time nanny, enjoy regular family vacations, and spend a whopping $18,500 annually on 'entertainment and eating out', a figure that doesn't include vacation expenditures.
As good parents they have hired a tutor for their older child. Both parents work; his annual income is $120,000 generously augmented by an annual bonus of $40,000 to $50,000. The wife and mother earns a salary of $36,000. Which places them, earning-wise well above even middle-class earners in Canadian society. But whoops! worries about whether he will receive his normal bonus this year may dump them into a lower-earning classification and that worries them greatly.
They consider themselves to be living comfortable middle-class lives, now, however in direct peril as a result of the general financial slowdown and his particular industry's decline (his company finances real estate and construction projects), forcing them to consider lowering their expectations for their happy lifestyle, and impinging on their savings toward their retirement goals.
They have $20,000 on credit cards, dine out weekly, and spend $1,200 a year on bottled water. Bottled water? A minimum of $1,200 to charity, given their income, would still not identify them as generous supporters of charitable needs, and yet they budget nothing whatever for charitable giving. Whereas vehicle leases and maintenance cost them $13,1800 yearly and insurance another $4,900.
They've recently paid $40,000 for a kitchen renovation, not the complete one the wife really wanted, but rather something she settled for instead of the full renovation she really desired. And she has plans to set aside $10,000 a year for continuing home renovations. They don't feel as though they're particularly extravagant, simply paying for essentials.
The wife's salary comes from her interior decorating business, and given the recent economic downturn she has expectations that her business too may suffer a downturn. On the other hand, they've done very well, haven't they, having invested $9,000 in RESPs for their children's future education, and $130,000 in RRSPs.
The potential loss of his bonus, and a downturn in her business may, sadly, lead to their having to seriously contemplate some life-style adjustments. The experts who evaluate their situation have some recommendations; cut their vacation spending by two-thirds to $2,000. Reduce dining and entertainment expenses by 50% to save $9,000 a year.
And wean themselves away from the $1,200 annual bottled water habit. Along with a litany of other proposed savings; purchasing outright used cars rather than leasing; consider one car instead of two; reduce RRSP contributions and pay off the expensive credit card debt.
We should have such worries.
Labels: Human Relations, Values, Whoops
posted by Pieface @ 12:14 PM
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