Budgets Revealed: 3 Housewives


As the 'finance minister' of the family, women are becoming increasingly confident and influential in managing the household's finances.

In this Budgets Revealed, we will look at how three housewives manage not only day-to-day expenses, but also aspects like investments, loans and insurance, for the family.

Tyas, 34 years old

Tyas lives in Surabaya. Although she has a side job, her income is not stable; in fact, it is very seasonal. Her husband makes Rp 18 million (USD 1,345.29; 1 USD =  13,380 IDR) per month and Tyas herself makes only around Rp 250,000 (USD 18.68; 1 USD = 13,380 IDR) per month.

“It’s a seasonal business. During last Idul Fitri, I made 2 million rupiah (USD 149.48; 1 USD = 13,380 IDR), but this only happens once a year,” says Tyas.

She and her husband have two home loans –one in Jakarta and one in Surabaya. The installment is 30% of her husband’s net income. In addition to these mortgages, Tyas also has to pay back Rp 3 million (USD 224.22; 1 USD = 13,380 IDR) to the bank for her debt.

They spend Rp 4 million (USD 298.95; 1 USD = 13,380 IDR) for monthly household needs. “We also invest Rp 1 million (USD 74.74; 1 USD = 13,380 IDR) and save Rp 1 million (USD 74.74; 1 USD = 13,380 IDR) per month,” says Tyas. The remaining is invested on unit linked insurance products.

Goal:
According to Tyas, she and her husband don’t have any financial targets. With mortgage payments going on for the next 14 years, Tyas says that their target is “to pay off debts and loans”.

LiveOlive comments:
It's good that Tyas and her husband are saving and investing about 10% of their income and have managed to keep their mortgage payments to about 30%.

Since they seem to have some extra disposable cash, Tyas should consider quickly paying off the other debt that she has, especially if it has a high interest rate. She needs to do this before putting more money into investments.

It is also important for them to have an emergency fund to cover at least 6-8 months of their expenses, especially since they have two mortgages to take care of.

Puji, 32 years old

For Puji, mother of two, managing money is a headache. With her second child only six months old and her first child going to kindergarten next year, she struggles when thinking about how to manage her family's finances.

“More children means more expenses. Especially nowadays, when education is not cheap,” says Puji, who is currently living at her parents' house.

Her husband makes about Rp 13 million monthly (USD 971.60; 1 USD = 13,380 IDR), while Puji cannot have any  side jobs because she is too busy taking care of her two children.

Recently, they decided to take a loan for a family car which means they have monthly installments of Rp 4 million (USD 298.95; 1 USD = 13,380 IDR) for the next three years. After making this decision, Puji said their savings have been reduced by half. Luckily, they did not spend the money they have been saving for their first child’s primary school tuition.

“I set aside Rp 500,000 (USD 37.37; 1 USD = 13,380 IDR) per month for my first child’s education fund,” she says, adding that she does not invest and only saves in conventional saving deposits.

Meanwhile, their monthly needs amount to about Rp 4 million per month (USD 298.95; 1 USD = 13,380 IDR), which includes their first child’s tuition and expenses for their second child. On top of that, her husband sends Rp 2 million (USD 149.48; 1 USD = 13,380 IDR) every month to his parents.

Goal: 
Puji and her husband want to build a house in Yogyakarta. They will need about Rp 500 million (USD 37,369.20; 1 USD = 13,380 IDR) for this, but they only has Rp 30 million (USD 2,242.15; 1 USD = 13,380 IDR) from her old savings. “We want to take out a loan to build that house,” says Puji.

LiveOlive comments:
Puji is correct when she says that education costs are high and keep on going up. In planning for her children's university education, she should therefore consider investments as this is the only way she can beat the rising price of education. The Rp 500,000 (USD 37.37; 1 USD = 13,380 IDR) every month for kindergarten can be kept in a time deposit so she can benefit from the higher interest rates.

Their car loan payment —at 30% of her husband’s income— is quite high. To prevent additional strain on their monthly cash flow and budget, we suggest that Puji and her husband re-think the home loan for building a house in Yogyakarta.

Dila, 30 years old

Dila used to work at the marketing department of a media company until she decided to resign from her company when she was six months pregnant. She supplements her husband's income by working from home, selling beauty products. Dila reveals that her husband’s monthly income is Rp 9 million (USD 672.65; 1 USD = 13,380 IDR) and her monthly net income is between Rp 2.1 million (USD 156.95; 1 USD = 13,380 IDR) and Rp 3.5 million (USD 156.95; 1 USD = 13,380 IDR).

The couple has recently purchased a house in Bekasi, West Java, for Rp 500 million and pay for it with monthly installments of Rp 4 million (USD 298.95; 1 USD = 13,380 IDR) for ten years.

According to Dila, renovating their new house takes up most of their combined income –about 35%, while 5%-10% is put into savings and the remaining is spent on daily needs. The income from Dila’s side business is spent on their child’s needs, such as vaccination, books, toys, etc.

Although their total savings is currently not more than Rp 50 million (USD 3,736.92; 1 USD = 13,380 IDR), Dila invests heavily on gold. She considers this precious metal as her investment and owns about 17 gold bars of varying weights –most of which were acquired before she got married. Dila said she plans to keep the gold for 5-10 years or use it as an emergency fund.

Goal:
She wants to increase her savings to fund their home renovation and child’s education. She wants to enroll her two-year-old son, Arda, in a preschool when he reaches four years old.

LiveOlive comments:
Now is a good time to set-up education plan for their child's university education. Dila should consider investments for this since they have a long time horizon, around 15-16 years until Arda goes to college.

Dila's mortgage payment is on the high side at Rp 4 million (USD 298.95; 1 USD = 13,380 IDR) – 44% of husband's income – so they should consider paying down some of the loan from bonuses or any extra cash they may have. This is to reduce the strain on their monthly cash flow or budget.

Dila also needs to set a budget for the renovation and save for it. In light of their significant mortgage payments, she should consider limiting the renovations to the minimum.

Lastly, Dila needs to make sure that her husband has life insurance and all family members are covered by adequate health insurance.

*Note: LiveOlive’s comments are based on information shared by interviewees. Portfolio yield may vary according to fund performance. Some names and identifying details have been changed to protect the privacy of individuals. 

Read also: Budgets Revealed: 3 Office Workers

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