This couple can’t stick to their $8,000 monthly budget

Jason* is a 34-year-old cardiologist in the Greater Toronto Area, and his wife, Jessica, is a supply teacher and style blogger. They try to live off an all-in budget of $8,000 a month — “to live comfortably, but not too comfortably” — which to him seems like lots for a dual-income family with no kids. But their DINK lifestyle of restaurants and travel adds up fast, and short of staying home entirely, they’re “not sure where we can cut back.”

Welcome to “A Week in the Wallet,” a new Chatelaine series that tracks the spending of Canadians across all ages, locations and professions. We’re going to ask each about their money habits and goals — and then peek into their bank statement to see if they align. This week, Jason gave a work talk out of town, which was the perfect excuse for a family road trip to pick up the couple’s adorable (and expensive!) new puppy. Even a modest mini-vacation blew right through their $2,000-a-week budget. Here’s where their money went, plus a financial expert’s advice on how they can do a little better.

Feb. 1
Life insurance, $58
Car insurance, $142
Jewellery insurance, $41
Professional membership, $296
Cleaning lady, $120
Starbucks card re-load, $10
Gas, $49
Pub lunch, $53
Canadian Tire, windshield wiper, $29
Dinner & drinks, $168
Nordic spa, $333 (+$20 tip)
More gas, $68
Sushi, $20
Parking, $4
LCBO, $34
Fast food, $23
Shoppers Drug Mart, vitamins and Tylenol, $43
Amazon.ca, car part, $45
Gas station, incidentals, $12
Air Canada, $223
WestJet, tickets for a future trip, $401

Feb. 2
Society for the Prevention of Cruelty to Animals, new puppy, $720
Pet treats, $11
Restaurant, $26
Restaurant, $90
Wal-Mart, $167
Netflix, $11

Feb. 3
Wal-Mart, dog supplies, $143
Winners, more dog supplies, $134
Gas, $41
Parking at work, $50
A&W Burgers, $22

Feb. 4
Cash for Jessica, mostly clothing, $250
Loblaws, groceries, $150

Feb. 5
LCBO, $19
Thai food, $43
Groceries, $22
Starbucks card re-load, $10
Rent, $2,150
Gas, $60

Feb. 6
Coffee, $2

Feb. 7
Cell phone bill, $131
Druxy’s, $9
Starbucks, $1
Druxy’s, $12

Weekly spending total: $6,486

The Expert’s Take
Shannon Lee Simmons, financial planner and life coach, immediately recognizes Jason and Jessica’s pattern: “This is a classic example of feast or famine budgeting.” Powering through more than 80 percent of your monthly budget in week one makes weeks two through four comparatively impossible. Setting yourself up for failure, says Simmons in her bestselling book Worry-Free Money, is a self-fulfilling prophecy that, after a few sufficiently discouraging rounds, will have you quitting budgeting altogether.

In better news, Jason and Jessica’s money is all there — it just needs rearranging. “They need to separate their spending money from money they can’t spend,” explains Simmons. Necessities (rent, insurance) and surprise spikes (travel, puppy) shouldn’t be lumped into the same pile, because the latter will “wreak havoc on budgets when one purchase can take up all the weekly spending amount.” Instead, it’s best to estimate these expenses annually and put that money aside (so you can exceed your monthly budget when necessary).

Based on their spending patterns, Simmons suggests Jason and Jessica divide their cash this way: $3,000 for fixed expenses (“the things that come out of your account whether you like it or not,” like housing, insurance, phone, Netflix); $1,000 in short-term spending for big purchases (like travel, puppies, electronics); $1,200 in long-term saving (“money to be socked away into the nest egg,” she says, for retirement and emergencies); and, good news for Jason and Jessica, $2,800 left over to spend on everything else — that’s groceries, gas, haircuts, tasty takeout, doggy toys, and whatever else they damn well feel like.

*Names have been changed

This post is part of Spend It Better, a personal finance collaboration between Chatelaine and MoneySense about how to get the most for your money. You can find out more right here.

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