Marriage Makes the Money Go : Part 2

The Good Housekeeping Marriage Book: Twelve Steps to a Happy Marriage
by Various

(Page 8 of 16)

The proportions to be spent for the larger items hold true in general for the family whose income is between $2000 and $3000 a year. Without knowing your individual circumstances, however, no one can make a budget for you in minute detail. The amounts you should allot to various items are governed by many considerations.

For example, there are some types of employment that require more expensive clothes than others, while some professions necessitate the purchase of equipment. Again, the major proportions will change with the needs of your dependents, whether these are children or older persons who look to you for help. Moreover, a wife who confines her activities to the home will do many money-saving chores and require fewer clothes than she would if she, too, went to business. Notwithstanding these individual variations, the foregoing rules of thumb will be helpful in keeping you within safe bounds.

But the proportion of your income to be spent for various purposes is only a small part of your problem. Don't be surprised if your budget fails to balance. Probably 95 percent of those who attempt to budget their family expenses have this experience. The primary reason is that few persons really know what it costs to live. This is due, in part, to the fact that we often confuse total expenses with day-to-day

expenses. Most people think of living costs as the immediate outlay for food, clothing, and shelter, disregarding the important item of depreciation.

The average housewife understands depreciation as it applies to food in a refrigerator, but gives very little thought to the same process as it applies to furniture, appliances, motorcar, clothing, and the house she lives in - if she and her husband own it. When replacement or repair of these more durable goods becomes necessary, there often is no fund available for the purpose. If replacement or repair is made, the budget is thrown out of balance. If neither is undertaken, depreciation sets in all the faster.

In order to catch up at this point, many couples take what seems at the time to be the easiest way out - they borrow money. This may appear to solve the problem, but actually the repayment of the loan throws the budget farther out of balance. Not only that, but a substantial interest charge must be met. To cover such obligations, you will have to curtail your living expenses, and you will find this much harder to do than to save for these emergencies in the first place.

One of the greatest financial difficulties encountered by young people (and many older ones, too, for that matter) is that of making an intelligent decision in the purchase of such important and costly items as a house, mechanical home appliances, furniture, and life insurance. The reason why it is difficult to select these things is that we buy them too seldom to acquire much experience with reference to them.

Life insurance is a subject on which very few of us have specific information. It is as important as it is trite to point out that the amount and the type of insurance should be governed by the kind of hazards against which you should provide. Yet it is necessary to realize that the need of protection changes as life progresses. A father with young, dependent children should carry considerably more insurance than a man with no dependents other than his wife. Consequently, it is desirable to carry two types of insurance: on the one hand, a straight life contract, entered into preferably early in life when annual premiums are lower, and, on the other hand, successive renewable term-insurance policies which may be purchased when temporary responsibilities, such as the rearing of children, are undertaken.

Protection for a childless wife might be limited to an amount equal to two years of the husband's salary. Roughly, the same amount of term insurance may be taken out for each child. The earlier in life such policies are acquired, of course, the smaller the annual premiums. Renewable term-insurance premiums are lower than straight life insurance because in the former there is no cash surrender value. Term insurance, like fire insurance, buys protection - and nothing else.

It is a mistake to look at life insurance as a primary form of saving because, generally speaking, the more the life-insurance policy conforms to a savings account, the less effectively and economically it affords protection against the hazard of death. Buy the life insurance as life insurance and put your savings into a savings account. It is well to remember at this point, too, that if you can accumulate enough to pay your insurance premiums yearly - rather than weekly or monthly - you will pay a lower rate.

The purchase of a home is another difficult undertaking for the newly married couple because the average person cannot tell the difference between a well-built house and one which is poorly constructed. Unless there is some understanding of this matter, it probably will be wiser to defer the purchase of a house and live in rented quarters until one acquires such knowledge. It must be remembered, also, that the upkeep of a dwelling is likely to come to a substantial figure and that the budget may be severely strained if one does not know in advance the actual costs of owning real estate.

Not the least of these items to be investigated is the amount of assessments which are or may be levied against the property. The likelihood of such levies is seldom pointed out by the real-estate salesman. Furthermore, if one's position is insecure or there is a possibility of being transferred to another section of the country in the course of one's employment, it would be wiser to live in rented quarters.

It is a good general rule to pay no more than twice one year's salary for a house; of this amount, not less than 10 percent will be required generally as a "down payment." Then you will have to pay interest and amortization on your mortgage, which, with taxes and upkeep, probably will come to as much as the rent for a similar house. At the end of a period of years, however, you own the house, which is a definite advantage.

Perhaps you have decided, as many young couples do today, that you will both work for wages. The arrival of a baby or possibly some other unplanned event may force the wife to give up her job. If you would avoid real difficulties, therefore, try from the outset to meet the big items - rent, food, essential clothing, and the minimum of insurance and savings - out of the husband's earnings. Let the wife's earnings cover only those items which, though desirable, are less important to your welfare, such as "luxury" clothes, recreation, and items of a similar character.

Garden City Publishing Co. reprint edition, 1949, by special arrangement with Prentice-Hall, Inc.
Copyright, 1938, by PRENTICE-HALL, INC.