Hat Tip: A reader who is free to self-identify
A reader pointed out an op-ed on the Lubavitch CrownHeights Info blog. The author is the CEO of Global Jewish Assistance & Relief Network and a credit repair company. He has discovered what I have been long been talking about: the house might look great, but the foundation is crumbling. In his words: "Most frum couples have been living on borrowed money to make ends meet, but the financial noose is tightening day by day."
As a service, he created an Excel spreadsheet with more categories and sub-categories than you can shake a stick out. The level of detail is a bit excruciating for me, but certainly will be quite helpful to those who have expenses all over the board.
A family that has high expenses that all over the board, is already in debt or nearing falling into debt, has no liquid savings to speak of, and doesn't have an idea of where in the world their money is going would be well served by an extremely detailed budget. When you are spending beyond your means, separating out the bakery expenses from the detergent from the nosh from the groceries is a good way to get a grip on the budget.
A few notes on the Excel Budget:
- I noticed that the budget did not include any lines for income. When I help someone make a budget I always start with income. Be the budget personal, non-profit, or business, I don't like discussing expenses without looking at income first (happens a lot with non-profits and fundraising becomes a plug figure).
- One thing I have noticed on nearly every "frum" budget I've seen is that the chagim are separated from the budget. This is something I do not do, and I think that once a budget is under control and sense has taken over, it is best to let the expenses of chagim be absorbed into general budget categories. I have a certain yearly figure in mind for what we should spend on consumer goods and food, and I make yom tov fit inside that budget. Scouring a budget is necessary for getting a budget under control. Once under control, I think it is best to limit expenses and force it all to fit within. Sometimes extra line items trick a person into thinking that the "making Pesach" is like putting on a roof.
- Another area on the excel budget is "personal simcha funds" including births, bar mitzvas, and weddings. Sadly there is no area listed for savings (i.e. retirement, emergency savings, the next car, the next roof, 529 plans). No surprise that I believe the simchas funds should take a back seat to this type of saving.
- Life insurance is thankfully one of the listed expenses. I think disability insurance should make that list too. For many, a personal liability umbrella insurance policy is a good idea. Anyone who can't pay for these should likely reconsider their summer home insurance.