How a Librarian With a Daily Spending Limit Does Money
Blair (not her real name) is a 27-year-old librarian in Montreal.
So, Blair, tell us a bit about your finances.
I have been on multiple contracts since I’ve started working a librarian. I’ve been really lucky that I’ve always had a full-time job when I’ve been working, but I do have to make more of an effort to have an emergency fund if the worst happens.
My current contract doesn’t cover sick days or vacation so I have to always budget for that.
Because I don’t have access to overtime, I basically treat my money as if I am paid hourly.
I am supposed to make about $50,000 CAD a year. With taxes, it’s about $1,376 every two weeks. However, when I did my taxes this year, my total income was around $48,000. Which isn’t terrible, but it does mean you have to keep track of things.
So what was the difference between what you were supposed to make and what you actually made? Is it because you’re on multiple contracts? Can you not predict your income in advance?
I can usually predict my income in advance, but if I take vacation for a week or I am out of commission for a few days, I am not getting paid. I usually am okay for vacations. I know I won’t get paid for those days, so I’m missing about $650 in pay if I go away.
Got it. So how do you keep track of things? What’s your financial system?
I treat each paycheck separately. $100 towards vacation/gifts, $50 towards emergency, $60 towards a tax-free savings account, and $60 towards retirement. Then I put half of my maximum rent and bills into savings, or $600. Any credit card debt gets paid if possible, and I pay $24 biweekly for my gym.
Whatever is left gets divided by 14 and that helps me put any purchases into perspective. Like, groceries are about $70 a week, so I shouldn’t be spending anything on 2-3 days each week.
How much is your rent?
My share is $675. That’s kind of on the expensive side for Montreal but it’s worth it to live somewhere in good condition. I have friends who only pay that much between them for a two-bedroom, but they do have a hole in the ceiling.
Because of the rental laws, it’s very hard to raise rents, unless a massive improvement has taken place. So tons of places aren’t well maintained because it’s not worth it to the landlord.
I have friends who think I pay too much, but I’ve lived other places so I know it’s not true. My boyfriend and I have a giant two-bedroom on two floors.
What about your emergency fund?
Right now I have $3,800 in my emergency fund. I always split my tax refund between my emergency account and my retirement fund and I used to have much cheaper rent ($412 a month, but there were too many people there) and I was putting the extra money that now goes into rent into my emergency and retirement fund.
So let’s go back to that bit about how you split up your money over the week, and if you spend $70 on groceries you have to stop spending for the next two days. Can you explain a bit more about that system? What gets included in this spending? Food? Clothes? Entertainment?
Everything other than the gym and my regular bills—which is why this might not be the best system. (My cell and public transport are included in my regular bills, at about $82 each.)
So since my last payday, I bought groceries—$75, one dinner before book club—$17, a bottle of wine for friends—$17, and two bras—$70.
And I have already overspent, so I recalculate how much I have left for the remaining days and it’s about $20 a day now. I’m not going to spend anything until Saturday when I have dinner with a friend, but by then I’ll have $80 that I could spend that day.
What happens if something comes up? What if you run out of dish soap or something! Are there ever emergencies or surprises?
There are surprises! Which is why it’s not the best system. The problem is usually not dish soap—I keep very on top of that sort of thing. It’s realizing that your bras are dying a horrible death and no matter what you wanted to do this week, they will have to be bought!
But I always try to not spend on Monday-Wednesday so there usually is some wiggle room. Also, if there is a lot of money in my savings for bills (over $300 more than I need at the end of the month), I will grab some of it.
I’ve tried spending like that before, and I found that I kept getting further and further behind. There just wasn’t enough money to meet the needs of life, at least not the amount I budgeted for it. Do you feel like you have enough money? Or do you look at it more like “I will give some things up to keep my spending at my pre-determined level?”
I am more willing to give up things. If I know an expensive thing like a fancy dinner is coming up, I’ll usually put money aside a few weeks in advance.
Do you have any advice for people who want to try this method of spending?
Build in a lot of wiggle room for when you make mistakes. I have a vacation/gift/fun money account, I have an emergency account for emergencies, and I put in a lot of extra money for bills, etc.
It can work if you also have a pretty steady weekly schedule. I go to the gym three days a week and I have a running friend date once a week, monthly meetups and choir each week.
And what can people do when they want to buy something but don’t have any money for it? What do you do? Do you read a book instead, or go for a walk, or…?
I read about two books a week from the library. I never go shopping unless it’s for something I need, and if I do go in stores it has to be so fancy that I can’t afford anything. It’s really hard to explain, but it does work!
I absolutely believe you! Do you have any other advice for Billfold readers?
Plan for emergencies since they do happen, but don’t feel bad when you have to pull out money for the emergency. Even if it might feel like you failed, you didn’t. It was there for what you needed it to be there for.
Photo credit: Abdallahh