Articles

YOU NEED A NEW BUDGET FOR 1950

You’ve got to get a new model budget to cope with the leaping cost of eating. Let our expert tell you exactly how much you should spend on what

SIDNEY MARGOLIUS January 15 1950
Articles

YOU NEED A NEW BUDGET FOR 1950

You’ve got to get a new model budget to cope with the leaping cost of eating. Let our expert tell you exactly how much you should spend on what

SIDNEY MARGOLIUS January 15 1950

YOU NEED A NEW BUDGET FOR 1950

Articles

You’ve got to get a new model budget to cope with the leaping cost of eating. Let our expert tell you exactly how much you should spend on what

SIDNEY MARGOLIUS

A CHEMIST who works for a large Ontario firm groaned the other day that he makes twice as much money as before the war, but can’t save a penny of it.

They weren’t eating or dressing any better, he said. They were paying more rent but certainly it was no larger percentage of his income than they spent in 1940. But his wife somehow had to keep dipping into their health-care reserves to meet current bills, with the unanswerable argument that eating is healthy too.

Of course he knew the cost of living had soared, but certainly not that much. What was wrong?

What most people struggling with budgets today don’t realize is that not only has the cost of living zoomed, but they can no longer afford to spend their money in the same proportions as before the war.

Before 1940 many Canadian families spent about 25% -30% of their money for food, 20-25% for rent, and so on. That was considered good budgeting. But you can’t do it today.

The fact is that the cost of eating has risen far more than any other expense you have, much more in most cases than rent, more than clothing, furniture, having a tooth pulled, riding on streetcars or going to the movies.

If you made $28 a week before the war and paid the typical $24 a month for a flat or semiattached house, don’t think for a moment you can lay out $40 on rent on a postwar stipend of possibly $50 a week. And if willy-nilly you’re paying the $40 or more demanded for recently built quarters you just can’t eat as well as liefore the war.

At the request of Maclean’s I have constructed a set of budgets (see box on next pagel tailored to postwar living costs which will guide you toward a more realistic allocation of your money than traditional budget figures based on prewar prices.

Let’s first understand there’s no budget that will fit all families any more than any one hat will fit every man. You’ve seen couples on New Year’s Day armed with a set of standard budget figures, pencils and grim courage, vowing this year they will budget. They give it up in alwut three weeks beca use the fun is gone from sending, the budget is too rigid, it never balances with the outgo anyway. You have to consider sample budgets merely material for tailoring your own.

Many families make the mistake of overestimating actual income. "Why, I’m making twice as much as tiefore the war,” says some individual in a threadbare suit. He forgets he didn’t pay taxes then. In fact, only 230,000 Canadian families had dealings with the income tax collectors tiefore the war; now about 2 millions tithe their earnings to the Government. Preen yourself as you will,

but for budget purposes at least count only your net income after all taxes and other payroll deductions.

The vital thing to remember in any spending plan for 1950 is not merely that it takes more dollars to buy food these days, but a much higher percentage of your income. In 1938 the Dominion Bureau of Statistics made a study of a number of Canadian families to find out where their money went. The average family of 4.6 persons spent about $28 a week in this way: Food, 31% ($8.79); Kent, 19% ($5.30); Clothing, 12%, ($3.35); Home furnishings and services, 9% ($2.50); Fuel and light, 6% ($1.70); Miscellaneous, 23% ($6.45).

That Rent Hike Looming

TODAY that family needs about $45 to buy Athe same goods and services, but Itecause of the disproportionate rise in the various expenses, here’s approximately how it would spend the money: Food, 40% ($18); Rent, 15.5%, ($7);

Clothing, 13% ($5.75); Home furnishings and

services, 8.5%, ($3.75); Fuel and light, 6% ($2.25); Miscellaneous, 18%, ($8.25).

The new-decade budgets on page 7 do reflect the new relative status of these items. But for rent we’ve allowed a little extra in our budgets more even than the Government’s official price index so far has indicated is necessary. For one thing, us

many as 1,500,000 Canadian families now face rent hikes as the result of the Government’s recent action in loosening controls; these could total as much as 18%-22%. For another, statisticians agree it’s hard for any index to fully reflect such hidden increases as reduced services, the fact tenants do more repairs for themselves these days, the fact that some have to pay extra bonuses for shelter, and so on.

The food allotment in these 1950 budgets is based on a recent survey by Maclean’s (“Would You Live Better in the U. S.?” Aug. 1) which showed it’s possible even at today’s prices to feed a family of three adequate, attractive meals on a little less than $5.50 a person a week. That sum permits meat at six main meals a week, including such favorites as roast beef, round steak and roast pork; it allows four glasses of milk a day for a child, two for grownups; six eggs for each person; ice cream for dessert twice. It does assume most meals will be eaten at home and Pop’s lunch prepared at home.

An austerity program? Not necessarily. A number of economies are often possible in the buying and preparation of food that won’t affect either attractiveness or nutritional value of meals. Certainly it’s for the better that the whole family shift rather than that the women continue to feed their men hearty meals but reduce the quality of their own food to a nutritiously dangerous level. Most surveys have found that women and girls suffer malnutrition more frequently than men and boys.

The most frequent leak budget consultants find, when they scrutinize the spending of people in financial hot water, is meat. Many eat large portions with the assurance that meat is good for you. It is, but just a quarter pound of lean meat is all that’s required for a nutritionally adequate portion. Moreover, eggs, cheese and fish are nutritionally interchangeable with meat, and—important to a budgeting family—have gone up much less.

In 1946, before price controls were removed, a Canadian wage earner could buy almost two pounds of round steak with his typical hour’s pay of 70 cents. Now he earns close to $1 but can buy only about a pound and a half with it. But in 1946 his hour's pay bought 15 eggs, and in 1949, during the comparable season, it bought 20 eggs. And he can still buy as much cheese with the hour’s work.

Big bills for bacon are a particular cause of meat overspending. Surveys show that moderate-income families don’t eat as many expensive roasts as those with fatter wallets, but they do eat as much bacon. In most homes it’s the most widely used meat. The bacon-drooler generally believes he’s getting meat’s high nutrition, but food experts say no, bacon must be counted a fat, not a meat.

If you’re out to buy most nutrition for your family at least cost, this is roughly the way you ought to spend your food money nowadays:

Fruits and vegetables..............24%

Milk and cheese.................18%

Butter, other fats, oils............... 9%

Meat, fish, eggs....................36%

Flour, cereal products.............8.5%

Sugar, syrups, beverages . 4.5%

But if you check the food bills of 10 of your friends I’ll bet you a pork chop you’ll find eight of them spending 40%-50% of their food money for meat alone.

A family that finds it irksome to budget so much for meat, so much for vegetables, might simply follow a policy of buying fruits, vegetables, milk, eggs and staples first, and then spend what’s left of its food money for meat.

A family of four living on $45 or less generally cannot afford to spend $5.50 a person for food but will have to rely more on cereal products, dry beans and peas, and the cheaper vegetables than the above food-dollar breakdown calls for. That family must also expect to devote more time to food preparation. Stews take time; roasts take money. Which have you got the most of?

There’s one important Continued on page 47

STREAMLINED BUDGETS FOR 1950

H ERE ARE the 1950 budgets tailored by Sidney Margolius to keep pace with the soaring cost of eating. He has based his budgets on a family of four in three different income brackets; you can easily scale his figures up or down to meet your own circumstances.

FOR A NET INCOME OF $45 A WEEK Item Food $18.00 40% Rent or Home Expense 7.50 16.5 Fuel and Light 2.25 5 Clothing 5.75 13 Home Furnishings, Repairs 2.25 5 Medical Care 2.25 5 Personal Care 1.50 3.25 Transportation 1.50 3.25 Recreation, Advancement 2.00 4.5 Insurance and Savings 2.00 4.5 $45.00 100% FOR A NET INCOME OF $60 A WEEK Food $20.00 33% Rent or Home Expense 9.50 16 Fuel and Light 3.25 5.5 Clothing 6.50 11 Home Furnishings, Repairs 4.50 7.5 Medical Care 3.50 6 Personal Care 2.00 3 Transportation 2.25 3.5 Recreation, Advancement 3.50 6 Insurance and Savings 5.00 8.5 $60.00 100% FOR A NET INCOME OF $80 A WEEK Food ... $22.00 27.5 Rent or Home Expense 13.50 17 Fuel and Light . . 3.50 4.5 Clothing 8.50 10.5 Home Furnishings, Repairs . 5.50 7 Medical Care 4.00 5 Personal Care 2.50 3 Transportation 2.50 3 Recreation,Advancement 8.00 10 Insurance and Savings 10.00 12.5 $80.00 100%

Continued on page 47

Continued, from page 7

consolation: the low-cost foods are just as nutritious as the fancy qualities. In fact, food chemists point out that the lower grades of beef, which come from grass-eating livestock, actually boast more of some important vitamins than the luxury grades supplied by stall-fed corn-fattened animals.

Nor should any budgeting family overlook the savings available in canned meats during the summer when fresh meat is so expensive. Many people have the idea canned foods are not as nutritious. Under modern packing methods canned meats and other foods retain virtually all their nutrients.

Don’t get the idea I am blithely consigning moc'""ate-income families to a dry-bear., 1 i.ig. These budgets are a compre-.: They try to represent realistic..'! -rational standard

of living; what na ; Canadian families have to live on. (Tue average industrial worker’s pay is $44 a week.) Within the bounds of realism my budgets do try to show how to distribute present income to buy a maximum living.

Even the lowest-income budget presented with this article allows $4.50 a person for food. When the Welfare Council of Greater Toronto last September made a budget for a family of five it kept food down to about $4 a person. This, the council said, was minimum, but could supply adequate nutrition. Peter Alapas, who wrote the council’s report on its budget, lived on it with his wife and child for two weeks and found it both sufficient and capable of variation.

For the entire budget the council estimated a city family of five would need about $50 a week to maintain health and decency.

But for a moderately comfortable living, a notch above the subsistence level, a Canadian family of four in a medium-size town really requires about $60 a week at current costs. That’s considering you don’t have some advantages like a house bought before the war which provides both low shelter and a kitchen garden.

A family of three requires about $50 a week, a family of five about $70, and a couple without children can do it on $40. These estimates are based on a formula generally used by budget experts: living costs for two are about 65% of those for four; for three, about 84% of the bill for four, and for five, about 115%.

These costs will run a little higher in the larger cities, especially in Montreal, Vancouver, and Saskatoon, where prices have outpaced the rest of Canada.

Like meat, butter’s price has ascended higher since 1946 than have wage earners’ incomes. Fortunately, restrictions on margarine were eased last year in some provinces so this alternative is more available. But many budgeteers will have to do some spadework on their families’ preju-

I once tried a taste test on the dietitian of a big hospital. She was a real food expert. I brought out two pats of magarine on separate plates and asked her to tell which was butter and which margarine. She nibbled and tasted back and forth, forth and back, and finally exclaimed, “That’s the butter!”

Prejudices aside, margarine’s nutrition is actually more dependable than butter’s; its quota of vitamin A doesn’t vary with the seasons.

Some families consume heavier quantities of table fats than they need any way. A man who does heavy work, or an active teen-ager, needs thick slabs of butter or margarine to slow down digestion. But a chap who sits at a desk all day doesn’t need to further retard his juices.

Heavy spending for commercially baked desserts is another frequent leak in food budgets. You can generally bake things at home for one third to one half the store price. Our model food allowance of $5.50 a person requires that most of the desserts be prepared at home.

If you’re finding it hard to tie together both ends of a budget you might also scrutinize your insurance expenditures. Many families spend as much as 10% of their income just for insurance, but get little solid protection because they disperse their coverage on too many members of the family, or

carry types of insurance that are too expensive for them.

If your present expenditures are burdensome, or if you should increase your coverage but don’t think you can afford it, these devices may help you:

1. Concentrate your insurance on the life of the breadwinner, not his wife, child or maiden aunt. That’s the primary purpose of insurance.

2. Consider buying low-cost renewable term insurance instead of the more expensive straight-life or endowment policies. Term insurance, especially for young families on moderate incomes, provides the most protection in case of death for the least money.

3. Pay your insurance on a halfyearly or yearly basis and you’ll find you can save as much as 11% over the monthly system of payments and much more over weekly payments.

Home furnishings is an area where we’ve cut down our comparatively model budget as against actual spending experiences of Canadian families as found by the Government’s survey. Part of the cost moderate-income families pay for equipment often is the extra charge for installment purchases. Budgeting’s big value is that it reserves money each week for the inevitable replacements, so when you have to buy you can trot to the store with dollars clutched in your hand and get yourself a nice low cash price.

Father’s Clothes Cost More

The $60 budget for four presented here permits a fair wardrobe, even though cleaning and repair bills are counted in the allowance of $7 a week. Such maintenance is estimated to take about 10% of the wardrobe budget.

Except for food, clothing costs have leaped more than any other item in your bill for living, so a woman who can sew pyramids her savings these days and can have a good laugh at our clothing budget. It’s funny that in an age of mass production home sewing saves so much, but it’s a fact that the cost of materials and trimmings for a woman’s dress generally is only about half the ready-made price, and

for children’s things it’s sometimes only a third.

Anyway, even without home sewing of any extent our sample clothing budget of $7 allows the woman of the family such basic items as four dresses and three pairs of shoes each year, and the man five shirts and two pairs of shoes a year and a new suit every 15 months.

It’s popularly believed it costs more to dress the woman of the family. But a recent survey by U. S. Government agencies, confirmed by other budget authorities, revealed most families spend more on the father’s clothes than on those for a housewife-mother.

Take a typical family of father, mother, boy of 13 and girl of 10, on our allowance of $7. Pop’s clothes would cost $2 a week, or about 28%; Mom’s, about $1.70 or 25%; the boy’s, about $1.90 or 27%; the girl’s about $1.40 or 20%. As with all standard budget figures there can be many deviations for individual and necessary causes.

Except for the $80 budgets, and the family of three with $60, these budgets won’t work a car, but do allow at least a one-week vacation for all but the $45 family of four. They also include ordinary entertainment and community expenses, such as movie, church and club contributions, a daily newspaper and a magazine twice a month. Any education expenses must come out of the “Recreation and Advancement” pocket of our budget.

The allotments of 4% to 6% for medical care are fairly typical of actual spending experiences of Canadian families and include medicines and eye glasses as well as doctor, dentist and hospital care.

The “Personal Care” item represents the things the wife buys to make herself beautiful and the husband buys to keep from looking too shaggy: finger waves, haircuts, toilet soaps, tooth paste, cosmetics, cleansing tissues, and so on. I haven’t skimped on this item in the sample budgets as much as I could have. It helps the morale of a budgeting family if they at least feel wellgroomed.

I haven’t separated insurance and

savings, not because I consider them the same thing (they should not be confused with each other), but because the amount of insurance needed is a highly individual matter. A man with small children needs more than one with older children. A breadwinner without other assets such as a paid-up house or some nice green bonds will need more insurance than a chap with

Tracking down the Bucks

It would be nice if my 1950 budgets showed all the families saving 10%' of their incomes, as budget experts like to recommend. Donald Gordon, former deputy governor of the Bank of Canada, estimated not long ago that Canadians are now saving about 10% of their incomes as compared with 5% before the war. That, of course, includes well-to-do families who save much more than 10% and bring up the average. Ten per cent is a desirable target, but difficult below the $60-aweek bracket. But notice how the percentage of saving zooms (or should) on the $80 budgets.

All you really need do is first keep a , record of your spending for several months to see where you may be going overboard. Then set up a tentative budget similar to those on page 7 but reflecting your own preferences and special needs. Continue the record of your spending to see that you don’t veer too far from your plan, and to determine when and where revisions may be desirable.

Jotting down your expenditures soon becomes quite automatic—no bother at all—and seeing where your money goes becomes increasingly interesting and illuminating.

It’s smart to have every member of the family participate, and to give all, even the children, their own allowances (no matter how small) for the things they must buy. You’ll find your family much more co-operative in keeping the budget if they help plan it rather than having it imposed on them.

And a little co-operation is a great help in a time of record living costs. ★