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Saving Money and Managing Debt

Finding extra money to save: The Maleks' story Add to ...

Risa Malek is a 47-year-old teacher in North Bay, Ontario. She makes $48,000 a year after taxes. She also gets $6,000 a year in support payments from her ex-spouse, for a total of $54,000.  She lives with her 17-year old son Anton. Anton plans to attend college next year, so Risa is anxious to save more each month to help pay some of those costs. Where can she cut back her spending?

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Risa knows she could probably spend less on some personal things like eating out and clothes. To find out how much, she sits down to create a new family budget:

Budget item

What it includesWhat Risa used to spend each monthWhat Risa plans to spend now each month
Income
  • Risa’s after-tax pay
  • Child support payment
  • Mortgage 
$4,500$4,500
Housing
  • Property tax
  • Heat and electricity
  • House insurance
  • Basic repairs
$1,825$1,825
Transportation
  • Monthly public transit for Anton
  • Car loan payment
  • Gas
  • Car maintenance and repairs
$525$525
Debt
  • Payments on a personal loan
$250$250
Other personal costs
  • Groceries and eating out
  • Health and personal care
  • Movies and other entertainment
  • Clothes
  • Sports equipment for Anton
  • Gifts
$1,400$900
Savings and insurance
  • Money for emergencies
  • Saving for Anton’s education
$500$1,000

 

What Risa learned: With her new budget, Risa estimates she can save $500 a month for Anton’s college costs. That will add up to $6,000 a year, which is about half of the total cost each year. If Anton gets a part-time job, he can help pay the rest.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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