This week Lulu over at Cherry Blossom Adventures wrote a very honest post about her lack of success in financial matters. A lot of people commented and shared their own issues with personal finance, too, which really surprised Lulu. She really thought she was the only one struggling but I have to say that I wasn't surprised at all. I know that everyone struggles in some way with their money.
At least, I know we do. There have been different struggles at different times in our lives. We have regrets that we didn't do more with our money when we were first married. We cannot believe that we survived those first few years after we moved to Japan. We are constantly thankful for our house and Chikara's current job. But the struggle that stands before us now is saving. I mean serious savings. We do really good in most other areas of our finances and we can save for our trips home and pay for them in cash but the trip takes up most of our savings. I know that I could say here that having four kids on one and a quarter incomes is difficult at the best of times so I shouldn't be so hard on myself but I KNOW that we can do better. We have to and we want to.
Over the last two or so years I have been searching the Internet for good information about personal finance. I have found the Money section of MSN to be overflowing with practical advice and recently I discovered The Simple Dollar, the blog of a man who has spent the last two years digging himself out of a huge financial hole. His story is very inspirational while still being relatable.
So for the next six months we are going to try something new. It's called the 60% Solution Budget. The basic idea is that you spend 60% of your monthly income on necessities: mortgage/rent, groceries, gas, utilities, etc. The other 40% is divided up into four categories: retirement, long-term savings, irregular expenses and fun money. I really feel like this plan covers all of our desires for our money. For fun, on top of that, we're also going to throw into a jar any 500yen coin that comes into our hand and use that to help fund our vacations. I'm going to keep track of it all on Microsoft Money (which I purchased online for $40 last year when it was on sale). I decided not to keep track of the 60% part since we work in cash and I know each week when the money is gone and also where it went.
Although I'm excited about saving for retirement and long-term goals, the reason we really decided to go with this is the plan for irregular expenses and fun money. This is the part that usually caused our carefully planned budgets to fall apart. You know, stuff you didn't see coming or forgot about. For example, next month we have to pay the 50,000yen ($500) application fee so Sakura can go to preschool next year and we're also all going to Tokyo for the Passion Conference which will be about 70,000yen. Both of these are expenses we both agreed on so there's no guilt there but stuff like this would usually bust our budget and then I'd get frustrated, give up for a month or two and then try again.
Another thing that frustrates me about trying to do all of this in Japan is the lack of information and services. For example, no one I know has heard of automatic transfers (a designated amount of money is automatically transferred into savings on payday). The interest rates for savings accounts and certified deposits are a joke (the interest for 300,000yen ($30,000) in a 5-year CD is 0.65%) and people are genuinely freaked out about investing. I want to find out more about what type of retirement plans are available but so far everyone says they just save cash in a very low-interest account. We have a life insurance policy and if Chikara were to die, the loan on our house would go to zero but I've never heard of a 401(k) or RSP type of plan to be a part of. Admittedly I'm just starting to look into this and maybe I'm looking in the wrong places but if all of this is possible then it's very well hidden.
I will probably update on our progress every few months and I hope that besides saving money, I'll be able to learn something through this process. I encourage you to click on the links if you're interesting in reading more on personal finance. There's a lot of great information out there!