Why the *bleep* aren't we rich yet?!
So I acknowledge this title is slightly dramatic, but in my defence, have you met me?
I remember, once, a couple of years ago having a Shabbos afternoon discussion with some friends about why the hell none of us are actually rich yet. A lot of it was tongue in cheek and a lot of it was genuine. We’re all highly educated working professionals; so why aren’t we loaded?
I also remember all the husbands blaming the wives and their respective shopping habits but I digress.
Either way I think about money a lot. I’m pretty sure we all do.
As such, I’ve decided to share my family’s 2020 budget (and some thoughts around money) in an attempt to open a judgement-free conversation.
I want to preface my budget by saying that my husband and I have made some extreme financial choices in line with our values. There’s a current movement about retiring early called FIRE (Financial Independence Retire Early). We don’t technically subscribe to this movement but when we read about it Jonathan was like: ‘Hello… been doing this since I got my first Barmitzvah cheque!’.
Jonathan is outstanding at money. Me… not as outstanding. But I’ve learned so much from him that I would have to say that I’m firmly in recovery. Together, we monitor our spending very closely and so, in some areas, we have chosen more expensive monthly costs upfront (classic comprehensive medical aid for example) because this pays us in the long term.
If you have any questions please ask me. I literally have no filter.
Lastly we are two adults and two pre-primary aged children:
Ok here goes...
Medical (R15 500):
In November 2019 our monthly fixed medical cost was roughly R5000 but, after analysing every single credit card, cash, and bank payment I discovered that we were spending an additional R11 000 per month, on average, out-of-pocket on medical expenses. And that was a non-pregnant/new-born year! So we were, in any case, paying the R15 000 - odd per month that Classic Comprehensive would cost us - but without the benefits. We were also so discerning with things like physio and specialists and I don’t think it was in our best interests. This year alone we’ve seen the physio around fifteen times. You get the picture.
One thing, however, that I know for sure is that every single person who is reading this blog, rich, poor, classic comprehensive or basic hospital plan NEEDS GAP COVER. Please just get gap cover right now if you don’t have it. (Stan Smookler will hook you up! 082 454 7860)
My husband’s family have a rule about motor finance: ‘Penns don’t pay off cars”. Pretty simple. I’m blessed to own a mom car now which I absolutely treasure; but I did drive my husband’s hand-me-down Toyota Tazz for two years - with two kiddies in tow. Long story short: that’s why there isn’t a car cost in our budget. This amount is solely for petrol.
We employ one full-time housekeeper. I think it’s relevant to mention here that my domestic worker is “live-in” and earns a 13th cheque; and that we supply her with food which comes out of my grocery budget, so I would say her “package” is worth closer to 9k but TG we don’t feel it in the actual Rands.
Groceries (R12 000):
As far as groceries are concerned I don’t skimp in the healthy foods department! Plus we’re kosher so meat and chicken is much more expensive than the non-kosher equivalent. We just don’t buy what we don’t eat. So while we can go through four cucumbers a week I rarely buy lettuce because we just aren’t a salad family. We’re a carrot-in-the-hand-tomato-with-salt kinda family.
Also remember I don’t buy traditional detergents or cosmetics which saves on this bill.
Oh wait, AND we’ve recently instituted a no socializing on Shabbos rule so as to truly make the most of our family time and also to help our kids stay calm (they get totally overstimulated after a full day of Shul AND Shabbos lunching) - this is saving us around another R5000 a month. It is also saving our sanity.
Schooling (R11 000):
My kids are in 2-3YO playgroup and 4-5YO nursery group. Private school fees are fun... but this is without doubt our biggest priority, value, luxury and privilege all rolled in one. Jonathan and I feel nothing short of blessed to have had a private Jewish education through the King David system; and humbled to do the same for our children. We’ve attended a few smaller private schools since Judah started his journey in the education system but we just don’t feel any of them can touch King David in terms of education, structure, stability, resources, accountability, Zionism, and yes, a love and respect for Yiddishkeit. For this we are willing to pay the additional R4000 odd it’s costing us right now compared to other Jewish Day Schools.
Housing (R10 500):
I think (read: I know) owning property can bump this budget up by about 20-30k if you factor in higher bond cost, city of JHB, higher insurance, maintenance etc. we are finding renting SO liberating. This is our first time renting in all our moves but it LEGIT saves us money. I haven’t even mentioned levies if you’re in a complex or building.
Furthermore because we live in a building there is form of insurance on the building itself which we don’t have to pay for as renters (this would be relevant in the event of a fire or flood but not theft). We feel very physically secure in the building too. Based on those two factors we don’t have any household insurance. We don’t own a lot of material possessions; the jewelry I wear on a daily basis is decent but not valuable enough to insure in case of theft or loss; our cell phones are constantly being upgraded anyway because of our contracts; we have one (FROT) laptop which serves its minimal purpose but isn’t worth more than R300; and if someone wants to steal my old Samsung flat screen TV – good luck to them! All things considered we would rather “self-insure” these things by keeping money saved in case.
Typing this all out for – I find it actually amazing. So much of this is a lifestyle choice NOT made based on finance but lands up saving us money. I love how all these conscious choices land up gelling together so well and benefiting the whole family exponentially. We choose to “live tiny” because it keeps us close to and connected to each other and the benefit is we don’t need that much space and thus save on housing costs. Voila
Charity and Saving:
I’m not going to reveal the Tzedaka/Maeser amount for obvious reasons but it is in our monthly costs too. I will say that in our first year of marriage Jonathan and I, with the help of our Rabbi, investigated the Maeser (tithe) amount and Halllocha extensively. We are very comfortable with a Heter (ruling) from an extremely well-esteemed orthodox Rabbi which explains that living as an observant Jew in Johannesburg is exponentially expensive; thus all reasonable living expenses can be deducted from the net salary amount before Maeser (10% charitable portion) is calculated. As such we deduct all of the costs I’ve listed here before we calculate and make our charitable contributions. There are no trophies for heroes. Some people also count their school fees and Shul fees AS their Maeser. We do not.
This is as well as some savings and retirement policies. It’s very important for us to save every month so we are definitely willing to sacrifice luxuries (e.g. DSTV or fibre internet) in lieu of investing. A penny saved is a penny earned!
With regards to actual investments we (my husband) decided to rather invest in this off-shore share thing (very descriptive I know) and not own property. With the amount that: maintenance of a home, City of Joburg fees, Levies, and a bond cost (if you go the finance route) would add up to the amount of our rent (if not more!).
If you own a home you are guaranteed to be down a minimum of 7-9k per month bare minimum in housing costs – even if you own your home bond-free!
This way we aren’t tied to an asset (in the currently unstable market and climate) and this share is a rand based asset but it’s an international product. So basically when the Rand weakens this product generally strengthens because it’s on the international exchange and when the Rand strengthens we also gain because we live in South Africa and spend in Rands (a decent example of this is the petrol price).
I really don’t have all the technicalities but this seemed like a fair way to hedge it. And yes, we are earning interest on our little nest egg as opposed to hoping that the asset (a house) appreciates whilst having to still live in it. We’re too risk averse for the latter.
There are pros and cons, obviously, but we aren’t willing to commit hook-line-and-sinker to SA right now, and take that plunge into the long term family home, but we also do not WANT to leave. We love it here. So this is our compromise which we are super happy with KAH.
What I’ve outlined above describes the absolute bare minimum we need as a family to survive. It’s a LOT of money to simply survive on. This does not even include things like holidays, chaggim, clothing, gifts, hidden costs such as bank fees or medical co-payments, luxuries such as essential oils or LEGO, repainting our flat, and things that just crop up out of nowhere.
I also haven’t included the R1000 we pay Telkom every month for my cell phone and for our home data package but the truth is we could, technically, live without this. I could load a R15 whatsapp bundle to my phone every month and carry on living my life.
So there you have it. The Penn Family 2020 Budget Outline. I would really love to know your thoughts and/or hear how you choose to spend your money. I genuinely think it’s a conversation worth having!