The perfect storm

By Eleanor Dhillon and Ashley Gholampoor

In 2018, Statistics Canada reported that Canadians are the most indebted among G7 countries.

Household debt in Canada reached $2.2 trillion last year, and families in Windsor are among those struggling to keep their finances under control. Spending money is easy but the little amounts here and there are adding up to large totals and can sometimes lead to deficits and debts.

Jora Singh and Manjit Kaur are the parents of five children aged 16 to 23. Singh is a full time dad and property rental business manager who decided to invest in property around 10 years ago as a way of helping him earn enough to provide for his family and sustain a passive income.

“The first thing is, I have to make sure I earn enough money to cover all of my expenses,” said Singh. “I did this by investing in property when my children were all young.”

Last year Singh’s total income was $84,000, with about a fifth of that going to income tax. This leaves him and his family with around $5,000 to spend each month. This budget has to cover the cost of seven people’s spending habits, his house, mortgage and other fixed payments.

“I have to pay the mortgage on the house we live in and for the family car, then all of the related expenses that come with the house and car,” said Singh. “Then I have to pay for the groceries.”

Each month Singh’s fixed spending comes to $1,570. This money covers the costs of his mortgage, property tax and property insurance every month. Singh then spends a total of around $1000 each month on his groceries and another $1,227 on his children. This money covers the cost of their phone bills, sports and gym memberships, make-up and other toiletries, clothing and car insurance for the oldest two children, plus the gas for the car.

“When there is money left over, I save it or I spend it on luxuries,” said Singh. “But there are always unforeseen circumstances with a large family that you cannot budget for all of the time.”Singh’s wife Kaur, also helps out with payments when she can. Kaur is a part-time cleaner and part time student who earns around $18,000 a year. As a mother she finds managing everything very challenging.

“I find it very difficult just studying, let alone working part time and looking after my family,” said Kaur.

Every month Kaur has to budget for her car which costs $400. Her car insurance comes to $160, then she has to pay to keep the car running. This usually costs around $150 a month she also pays her phone bill which costs $60 and keeps around $100 to spend on her children’s needs.

Sometimes the pair get their budgeting wrong, but they are lucky enough to have close family who are always willing to help.

“The biggest thing I have trouble planning for are the everyday changes as the children grow up,” said Singh. “For example, my eldest son and daughter are now driving so I help out with the costs of the car, the repairs and the insurance.”

Singh tries to save money every month in case of any unforeseen changes to their lives and strongly believes that in order for your budget to work, you need to make sure there is more money coming in than there is going out.

“The most important thing is to make sure you don’t spend more than you earn each month,” said Singh.

Christine Yeoumans, 52, is a youth minister at St. John the Baptist Church in Amherstburg. With her husband Michael their total income is $140,000 per year.

“My husband and I hold a mortgage, a line of credit and two credit cards that total $160,000 in debt,” said Yeoumans. “We can definitely pay off our credit cards to ease the debt as well as make extra payments toward the line of credit.”

Yeoumans has five children over the age of 18 and all of them are living at home. She said her family has had issues in the past with money and paid almost $500 for groceries each week. According to Yeoumans, neither she or Michael have tried any budgeting strategies and are not great with budgeting money. She did find ways to shop better with price matching but has stopped since the children now take care of their own expenses.

“In the past we have experienced big time struggles. I was a stay at home mom and because his income depends on weather, it makes budgeting difficult,” said Yeoumans. “He works in the U.S, so when the U.S dollar dipped below the Canadian dollar about eight years ago, it was the perfect storm. We experienced hardships that year which almost costed us our home.”

According to Yeoumans, their yearly expenses are around $35,000 dollars. She and Michael are not worrying about their children’s education as a factor in long-term debt. Their 19-year-old twins have plans to enter college in September but are working to put themselves through school.

“We are now saving money for retirement,” said Yeoumans. “We do not have a financial budget for our home, but the best financial advice that we do not practice but should, is to take some money at the end of the month and tuck it away.”

Neil Shah is a chartered accountant who works at Passman Leonard helping people with their taxes and queries. Shah says budgeting your money can have many benefits on your income, and the key to doing this is being organized and smart with your money.

“Budgeting can help in many ways with your profit and loss, especially if your budget month to month enables you to buy materials and products for your business in order to maximize your profit,” said Shah. “Budgeting month to month will also help with your cash-flow income.”

Budgeting for families is not always easy and getting it right every time can be difficult, especially if a family is large.