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Meet the Joneses: Part Four

A Look at the Budget of a Hypothetical American Family

It’s time to check in again with Joe and Josie Jones: our hypothetical average American family as they splashed through July with unemployment income continuing to flow (for now), temperatures continuing to climb, and as some of the shine of a new budget started to wear off.

And a brief friendly note before we begin: there is no one-size-fits-all budget, and financial pictures look very different from one family to the next. We’re just giving a made-up example and using the median household income seemed like a nice place to try and do that.

A Quick Recap

Budgeting in April 2020

  • Hello, global pandemic
  • Joe and Josie started a budget
  • Joe’s income dropped 30%
  • A $3400 stimulus check arrived
  • They were able to budget out their expenses for almost two whole months with the money they had

Budgeting in May 2020

  • Joe and Josie budgeted with the new reduced income
  • Josie got laid off and filed for unemployment benefits

Budgeting in June 2020

  • Thanks to the stimulus money and a tax return, they had the whole month of June already budgeted for when they started the month
  • They had a cash-rich month between unemployment benefits and deferred student loans
  • Their credit card balance stayed steady
  • With their cash inflows, they funded through August, set up a “Next Month” category, set up a “Christmas” category, and earmarked $300 for a camping vacation.

Is it just me or are we really starting to get attached to this made-up family? I’m cheering them on with fist pumps all around.

They’re 3 Months Into Budgeting…

Joe and Josie have been budgeting now for three whole months. It’s been an odd time to pick up a new skill like budgeting, but boy are they glad they did. It’s hard to put into words the level of control they’ve felt despite everything going on in the world, but they feel like there’s some solid rock under their feet now, where before it felt like they were trying to stand on lily pads.

Every few days they’re still learning something new, and Josie actually kind of likes to budget. It’s fun to assign paychecks to categories and see the bubbles turn green.

Joe, on the other hand, is a little bit over it. It feels tedious. It feels like self-control to never spend money, and they’ve still had their fair share of money bickering, although with less of a deep sting than before.

And that $300 set aside for vacations last month? That was just the green light they needed. They headed north for a campground by the lake and unplugged from everything (yes, including their budget). The $300 turned into $489 between ice cream cones on hot sunny days, extra firewood, s’mores supplies, and a few emergency swimsuits when the kids’ gear was left at home. Sure, there was some guilt when Josie cleaned up the budget in the days that followed, but money was moved around and all was well in the world once again. Plus, she would do it all over again if she had to, even if that ice cream had cost double.

The July Budget

Josie continued to get unemployment benefits through July (though who knows what that will look like in August), and Joe is still operating at 70% of his prior income with no change in sight. Now that they’re three months into budgeting, the Reports in their budget are started to prove more helpful.

Let’s take a look at a couple different reports now that they have three months worth of spending data.

Income v Expense Report

Let’s look at the money they brought in for the month vs. the money that went out in the Income v Expense report. The report below shows the inflow and outflow of cash from May of 2020 through July 2020.

Income v Expense report for May 2020 through July 2020

Along the bottom, you see the numbers are all green with some pretty impressive net income gains each month. In the last three months, they’ve been an average of $2700 net positive every month (thanks to a tax return, stimulus money, and beefed up unemployment benefits).

Put another way, that means each month they were bringing in more money than was going out each month.

Spending Totals Report

The next report we look at shows spending between their needs (in purple) and wants (in blue). Along the right hand column, we can also see they’re spending an average of $3,563.82 per month, and that feels like a very nice number to have in front of them.

YNAB Spending Trends Report
Purple shows spending on “Needs” and blue shows spending on “Wants”

Spending Trends Report: Groceries and Eating Out

Now let’s look at their food spending habits over time by breaking out the groceries and eating out categories. In the chart below, you can see money spent on groceries in purple and money spent on eating out in blue.

There was a slight spike in June when Josie was stress baking soo many apple pies, but it leveled out to spending an average of $584 between the two each month. It’s a lot less than they used to spend on those two categories, but it actually doesn’t feel that much different, they’re just more mindful of where their money goes.

YNAB Spending Trends Report: Groceries
The Spending Trends report is narrowed down to show spending on groceries (purple) and eating out (blue) and shows average spending on food is $585/month.

Net Worth Report

The last report we want to highlight is Joe and Josie’s net worth report: and it’s a stellar story. In the report below, the orange bars shows their credit card debt while the blue shows their assets (they don’t have their mortgage, student loans, or car loans set up in YNAB yet). You can see their credit card balance has actually gone down slightly and their cash has consistently climbed. In the last three months, they’ve increased their net worth (assets minus debts) 84.5% from where they started: it’s gone up $4,877, and they now have a net worth of $10,645. Wow!!

Orange bars show debt staying steady and blue bars show assets steadily climbing

Yep, part of this extra boost was due to all those government inflows, but the last three months have been far more transformational to their financial situation than they could’ve even realized.

Now what will they do with the opportunity they’ve just been handed?

With Josie’s beefy unemployment looking a little different as they head into August (the extra $600 a week just expired on July 31st), they’re continuing to be very conservative with their money—opting to continue to budget out their money rather than pay down credit card debt.

You can see how they budgeted out their money here:

At the beginning of August, they were already budgeted well into November. That feels like a nice runway. While it’s shaky if there will be another round of stimulus payments, and even though their unemployment benefits just likely took a sharp nosedive, they feel very much in control with the money they have.

Deep exhale.

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Meet the Joneses: Part Four