◆ The household account book is in the red every time, and I have no hope for the future.
The name is “Money Plan Clinic”, which answers the problems of households that you have received. The counselor this time is a housewife in her 40s who has four children. Mr. Yasuhiko Fukano, a financial planner, will give you advice.
Four working moms (pseudonym)
Female / Part / 41 years old
Hiroshima / Owned house / single house
◇ Family structure
Husband (company employee / 40s), 4 children (12 years old, 10 years old, 8 years old, 6 years old)
◇ Consultation content
First of all, I would like to ask for advice on where to cut. I am worried about the future such as educational expenses for children. Seven years ago, my annual income was halved, and I cut down my savings considerably there.
I’m always cornered by lack of money and I have no hope for the future. I have four elementary school children, and I am full of anxiety, such as spending lessons, anxiety about future education expenses, and retirement without retirement allowance.
Also, even if I keep a household account book, every day I get sick of losing money. I don’t even know how reasonable my living expenses are. I would like to discuss with you whether the current insurance is okay. Thank you.
◇ Household income and expenditure data
The chart shows the household income and expenditure data of the four working moms.
◇ Supplementary household income and expenditure data
(1) Breakdown of insurance
・ Life benefit insurance (life insurance 60 years old payment completed, death 2 million yen) = premium 6000 yen
・ Variable insurance (fixed-term type insurance period 25 years, death protection 9 million yen) = premium 24,000 yen
・ Individual annuity insurance (fixed for 10 years from 60 years old, annual amount 780,000 yen) = insurance premium 9500 yen
・ Term insurance (insurance period 3 years, death protection 7 million yen, medical special contract hospitalization 5000 yen) = insurance premium 11,500 yen
・ Life benefit insurance (life insurance 60 years old payment completed, death 2 million yen) = premium 4600 yen
・ Variable insurance (whole life insurance) = premium 23,000 yen (* annual payment)
・ Medical insurance (whole life insurance) = insurance premium 7700 yen
(2) How to use the children’s allowance of 50,000 yen
It is planned to be used for savings, but it may also be used for home repairs and car repairs. Even so, it is said that 400,000 yen is saved annually.
(3) How to use the bonus
Basically, I plan to use it for savings, but I spend a little on it for leisure expenses during the summer vacation and buying broken electrical appliances. Basically, like the children’s allowance, the bonus is given to the husband in its entirety and pooled in the savings account. I think that 400,000 yen has been saved.
(4) About mortgages
Property price 48 million yen, expenses 2 million yen, down payment 10 million yen, borrowing period 35 years, monthly repayment amount 140,000 yen (no bonus payment)
(5) About vehicle costs
Due to the large number of family members, my husband (for commuting) and my wife own two. Monthly amount for car insurance and inspection, repair and inspection. He says he is careful about saving money, such as using a bicycle as much as possible.
(6) Education costs and career paths (consultant comments)
I’m always wondering if I should quit my lessons because I can’t afford much luxury. I speak a foreign language and swim (2 or 3 people each). Some children want to go to a cram school and take a junior high school exam (prefectural), so I’m worried about whether I should give up.
The result of the pass judgment test seems to be able to pass, and it seems that there is a possibility if you do your best, but should you pay for the cram school now or should you feel like taking the high school exam?
If I have four siblings, I can’t concentrate on studying at home, so I want to go to cram school.
◇ Four advices from FP Yasuhiko Fukano
Advice 1: Double-check your household income and expenditures to understand the flow of money
Advice 2: There is an urgent need to review the household budget, and a bold review
Advice 3: Education costs can be prepared if the savings pace can be maintained
Advice 4: The goal is to make the household profitable and save the necessary savings.
◆ Advice 1: Check the household income and expenditure again and grasp the flow of money
First, let’s sort out the household income and expenditure.
According to the consultation, “Monthly household budget is in the red”, but the income and expenditure data received is 530,000 yen for take-home income (including 50,000 yen for children’s allowance), and the total monthly expenditure is 480,000 yen (total insurance premiums). The amount does not match the breakdown, but the total amount is used for calculation), so at this point, the surplus is 50,000 yen.
If you are really in the red every month, you are spending this 50,000 yen somewhere every month. And while it’s okay if you just miss it, it’s a problem if you have spending that you don’t notice.
Alternatively, this amount is the same as the children’s allowance, and it is said that the children’s allowance is “basically used for savings. I think that 400,000 yen is made”, so if you limit it to the income of the couple, it is called “deficit”. It may mean.
The same goes for bonuses, which basically go to savings, and it is said that “about 400,000 yen a year” can be saved.
If so, it means that you are now 800,000 yen more than your savings balance a year ago. Let’s confirm this. If it doesn’t change much from last year, it means that you have spent 800,000 yen. The question is whether the spending is recognized …
Also, if it increases by 800,000 yen, it is not a deficit household. On the contrary, if you can save that much in this situation, it’s okay. Never be pessimistic. In any case, check for changes in savings and for any oversights.
◆ Advice 2: There is an urgent need to review the household budget, and a bold review should be made.
So, if there is no doubt that the household is in the red, what kind of measures will be taken?
One is to increase your income. I don’t know the details, but I heard that my annual income dropped by half seven years ago, so I wonder if there is room for it to rise again. If you think only about working, your wife is more likely to do so.
Of course, it is not easy to switch from part-time to full-time work with the childcare and housework of four children, but with the cooperation of the family, it may be possible now, but in a few years. I think it is necessary to think about it.
However, looking at the household budget, there is not much time to spare. As a result, there is an urgent need to make a drastic review of household finances.
First of all, if the household is really in the red, that is, if the actual annual expenditure exceeds the income, the child allowance of 50,000 yen per month will not be dealt with. Let’s do it thoroughly. With this alone, you can save 600,000 yen a year.
Next, cut the insurance. The insurance premium does not include student insurance, and the monthly premium cost of 80,000 yen is clearly too high. It needs to be boldly reviewed.
First of all, the variable insurance and pre-need benefit insurance for married couples are paid insurance.
Your wife’s medical insurance is expensive for this coverage. It may be the type that the premium payment ends at the age of 60 or 65. With whole life insurance, even if you add an advanced medical special contract to hospitalization of 5,000 yen, the insurance premium will be in the low 2,000 yen range per month.
The premium for the term life insurance of the husband is also high. This will also be canceled.
As a new member, securing the necessary death protection is the highest priority.
If you have group credit life insurance (if you have a mortgage loan at Flat 35, you may not have it. Please check), your child’s education expenses will be 5 million yen x 4 people. The minimum required is 20 million yen for the husband and 10 million yen for the wife.
If you secure each with a term life insurance with an insurance period of 10 years, the insurance premium will be in the mid-6000 yen range for the husband and in the high 1000 yen range for the wife.
As for medical insurance, the wife uses the whole life insurance type as shown above. The same applies to the husband, and the insurance premium is in the mid-2000 yen range. With a total of 4 new subscriptions, the monthly fee should be around 12,000 yen. With this alone, the insurance premium can be reduced by 40,000 yen a month.
Please continue the remaining individual annuity insurance as it is. If you cancel the contract when you run out of education expenses, you can use it as a source of funds.
Looking at other spending, we can see that we are doing our best to save money. There are many things that cannot be cut any further. Among them, if there is room to suppress it, it is still food expenses.
Although the child is still in elementary school, it is for 6 family members. Moreover, if your wife is busy, food costs tend to be high in terms of saving time. It’s understandable enough. So, first try to reduce the cost by 10,000 yen a month, and if you get used to it, 20,000 yen a month.
If you reduce your monthly expenses by 10,000 yen for food and 40,000 yen for insurance and save 50,000 yen for your children’s allowance, you can definitely save 100,000 yen a month. If you can add half of the bonus of 300,000 yen to this, you will be able to save 1.5 million yen a year.
In just two years, the savings will increase by 3 million yen to a total of over 5 million yen. Know that there is still room in the current household to do that.
◆ Advice 3: Education costs can be prepared if the savings pace can be maintained
There are two important points to consider for future money plans. One of them is the cost of education, which the consultants are also worried about.
Basically, in the case of public schools up to high school, the educational expenses up to that point are paid from the household budget. It is a university expense to prepare systematically, and if it is a private liberal arts, the average is 3.9 million yen in 4 years. It will be 15.6 million yen for 4 people.
If the previous savings pace continues, the savings will increase by 14.7 million yen 12 years after the younger child turns 18 (estimated in the case where the savings pace drops as the child allowance disappears), so everyone By the time you graduate from university, you will be able to manage to prepare for your education expenses.
However, this is just a calculation. Along the way, there is a good chance that your savings will slow down and your unexpected spending will increase, resulting in a shortage. Even so, don’t borrow new money for education. As long as you have a mortgage, it’s too dangerous.
Unless it is a benefit type, please avoid using scholarships easily. It would be a huge handicap to carry millions of yen in debt before your child goes out into society.
In that case, education costs will also be saved. As a parent, it can be painful, and it can be a temporary pain for your child. Still, it is wise to organize the lessons and keep them one by one.
If your child’s junior high school exam is public (consistent middle and high school), you don’t have to worry about tuition fees, but if you really want to go to a cram school, you need to be conscious of cutting some of your living expenses. Of course, it is assumed that all four are public up to high school.
◆ Advice 4: The goal is to make the household profitable and save the necessary savings.
There is another cost to remember. It’s a mortgage. The repayment is in the late 60s. This is pretty strict. Especially after retirement, 5 years until the public pension is paid. You can imagine that the monthly payment of 140,000 yen during this period is a considerable burden.
I can’t afford to start preparing for old age yet, but making it as light as possible will eventually lead to measures for old age. So how do you avoid this? Specific measures include prepayment or refinancing of loans.
I don’t know the type of loan (fixed, variable, etc.), but from the repayment details, it seems that the loan amount is 40 million yen and the interest rate is about 2.4%. If so, if you prepay 3 million yen in 3 years, if the interest rate does not change during that period, the repayment period can be shortened for 2 years and 11 months, and interest expense will be reduced by 1.91 million yen.
Of course, it is desirable to do this several times instead of once to shorten the repayment period as much as possible.
On the other hand, what about refinancing? If it is the contents of the previous loan, the current mortgage balance is about 31 million yen. For example, if you refinance it with a repayment period of 25 years and a fixed 1.0% for the entire period, the monthly repayment amount is about 117,000 yen.
The monthly payment will be 23,000 yen, but 700,000 to 1 million yen will be charged separately. Refinancing is not realistic at this time, given the risk of this reduction in savings.
Either way, you can’t do it right now, but you’ll definitely have to do something about it. However, with the savings pace shown in the education fund above, mortgage measures cannot be dealt with.
In the process of reducing children’s allowance, will we cut spending somewhere and keep the pace of savings? Or will it be supplemented by increasing income? Another option is to work longer. Not to mention 65 years old, I think it is necessary to be prepared to work hard until 70 years old.
How much is the living cost reasonable? It is different for each person. Suffice it to say, the living expenses are such that the household is in the black and the necessary funds can be saved systematically. In the case of a consultant, the income halved a few years ago still has a large impact on the entire household, but it is regrettable.
Consider the priority of spending, cut down on those with low spending, and start saving households from today. Now that we have four children, we must not give up hope for the future.
If you get tired of saving, then you can spend well with your family. The most important thing in saving is continuation. Try to manage your household budget while keeping your ingenuity and balance.
◆ Impressions from four working moms
I will reconsider the lessons and let each person learn what they want to do the most. When the price dropped, I went to the supermarket and bought some side dishes, but I would like to review the contents of the food expenses and manage them properly on a weekly basis so that I can reduce them.
I hope I can find a job that will increase my income. I would like to try to live a humble and warm life in a way that suits my current height. Thank you for your advice.
The one who taught me … Mr. Yasuhiko Fukano
One of the veteran FPs familiar at the Money Plan Clinic. Through various media, we provide information on general money-related matters such as household management methods and investment enlightenment. All About Also active as a savings and investment trust guide.
Interview / text: Kyotake Shimizu
Sentence = Arujan Editorial Department