This past weekend I was helping my aunt figure out her budget and set up a Mint.com account. She was recently laid of from her long-time job, which wouldn’t have been a big issue years ago when she was still married with a household income of over $300,000. But going through her budget, suddenly even $10,000 a month of after-tax income looked very tight.
It certainly doesn’t help matters that my aunt lives in a very expensive part of the country. She now rents a lovely (yet small) 3br/2ba house for about $3400 a month (which isn’t that bad considering I currently pay $2350 for a one bedroom (my town is just even more expensive than hers.) She has a sizable amount saved up thanks to her marriage (and no prenup, worked out in her favor) but without a job she still could burn through that well before retirement age (she’s in her early 50s now.)
She had a basic budget scoped out in Excel but it didn’t include everything. I helped her turn her excel sheet into a more meaningful budget and then built a budget plain in her new Mint.com account to align to these goals. Of course, the goals aligned to $10,000 after-tax income per month. She’s starting her own business now and has a few potential clients but businesses can have up months and down months. It’s very possible she’ll do better on her own than what she earned employed full time, but it’s certainly scary, even with a serious sizable amount in the bank, without a regular paycheck and home equity.
This is exactly why it’s so important to me to save up a lot before I have children. I certainly don’t expect to get divorced but I’m also marrying a man who will always make less than me (unless I decide to go into a lower paying career, then who knows.) People think I’m crazy to be so concerned about this but my aunt is the perfect example of someone who can’t even get by on $10,000 after tax per month. She doesn’t even spend a lot on shopping or makeup like I do. Her shopping budget is under $300 per month, including clothes for the kids!