i^y^^^^MMmm^M^^m^^m^md^mmkM^M^kdm^^t^^^^^iiMM^kMm^d !1! rhe Art of Spending PRICES: The Art of Spending 10 cents Weekly Allowance Book . 10 cents Inter -leaves of Self-Accounting Check Book, Directions andYearly Summary; for 300 Check Book 50 cents 12 Home Service Letters, telling "How to Stretch the Dollar," to be mailed monthly $1.00 PUBLISHED FOR BANKS BY|S! American School of Home Economics 506 West 69th Street - - - CHICAGO ©CI. A 611.533 APR -R mPI i The Art of Spending How to Live Better and Save More by Maurice Le Bosquet Director, American School of Home Economics YOU would like to get more out of your income — we all would; that is a uni- versal desire. But how? Money is made to spend, of course — that is what it is for, but what you or I or anyone gets for our money in satisfaction, health, happiness and progress depends entirely on the way we spend our income. And it is not the amount of income, but the kind of life it buys that counts. What you want to get out of living, naturally, should govern your spend- ing; but neither you, nor I, nor anyone can get what we want simply by wishing; we must have some definite purpose-r-'wt must have a plan to get what- we want out of our income and out of life. The plan must come first if we wish to build a successful house or a bridge, if we wish to make a dress or run a business, if we wish to do our work easily or get the most joy out of living. And the better the plan and the closer it is followed the more suc- cessful will be the result. This is essential to success in "The Art of Spending" — to mal^e a plan and follow it. Forethoughtful spending is not the common and usual practice now-a-days. We are more apt to be "free spenders" and take a certain pride in extravagance; more apt to spend first and trust to good fortune to make income meet expenses. This "spend first" system has always been the practice of our Government at Washington. Copyrighted, 1921 THE ART OF SPENDING A National Budget OUR Uncle Sam is now loaded down with expenses of over four billion dollars a year. As consumers, we have to pay this amount yearly in taxes, directly and indi- rectly — "sure as death and taxes." To help reduce this burden of taxation, our lawmakers have about come to" the conclusion that it might be well to have a plan of spending or "budget" and make yearly expenditures corre- spond to income. It is estimated that National expenditures, except for fixed charges, can be reduced one-fourth through a carefully worked out budget system, for the reason that planning the expenditures as a whole will help to elimi- nate waste, unnecessary expense and duplica- tion of effort. Why A Household Budget? ALL up-to-date business is run on the budget system, with full records and accounts to find costs and keep a check on budget appro- priations. Now 'hom.emaking is the biggest business in this or any country. Somewhere between 70% and 80% of our 70 billion dollars yearly income is spent directly by our indi- vidual homemakers. Very little of this 50 odd billion dollars is spent with any well defined plan and very, t)ery little of it is accounted for. Not one family in a thousand knows what was spent, say, for food in 1913 — nor in 1920. This spending without plans and without records wastes millions, yes, billions of dollars yearly — and we still have a war to pay for! Isn't it reasonable to suppose that sim.ply keeping a record of expenditures for food, clothing, operating, etc., and comparing figures from month to month will help to check over expenses? And particularly if there is a definite aim or purpose in the spending? Experience has shown that spending the family income on the budget system and keep- ing a check on expenditures will save one-tenth or more of the income of almost any family. HOW TO LIVE BETTER AND SAVE MORE 3 That is, under the budget system, one-tenth the total income can be laid aside as savings and the family live on the balance of the income with equal or greater satisfaction than on the full income without planned spending! If this be so — and it is — isn't this scheme worth trying — not for some other family but for YOUR FAMILY? I'm From Missouri — Show Me! YES,'* you say, "I have heard of this budget scheme, have seen quite a number of budgets. You are supposed to spend so much for food, so much for clothing, so much for rent and all, but none of the plans would do for my family." True, very true, no ready made budget will fit. Every family must be a law unto its own budget and every family must draw up its own plan of spending, for no two families have identical tastes, conditions, or the same income and requirements. For What Are You Running The Home? 'T^HE first step in planning your budget, as -■- suggested, is to define the family aim or purpose. What is it your family expects its income to yield? There may be one or several aims. After allowing for necessities, perhaps the most usual family aim or ambition is to provide the children with a good education and a favorable start in life. Next comes provision against reverses in fortune, sickness and old age. Perhaps owning a home of your own may be a guiding factor or accumulating capital for a good business opportunity or building up an investment fund to provide more income from interest or dividends. Then there may be many minor aims, such as a vacation trip, a summer camp, new house furnishings, labor-saving equipment, an auto- mobile. What is it the family desires most} THE ART OF SPENDING Too often there is no well defined plan in the spending. The family just lives along from month to month and from year to year, paying bills and keeping out of debt maybe, but making no progress financially and getting nowhere. // is impossible to arrive unless you linow where you want to go. So a definite aim and purpose must be the first step towards success in "The Art of Spending" — to live better and save more. Where Your Money Goes 'T^HE next step in planning a budget is to •*• figure out as nearly as possible what has been spent in the various avenues of expenditure for the month and year. As few families have any definite records of where the income goes, it will probably be necessary to keep records or accounts for a month or two of what you are spending, to decide what you must spend, what you wish to spend and where you can most easily cut expenses to provide more savings for future needs or desires. What's The Use of Accounts? NEARLY all families, at one time or another, have made spasmodic attempts to keep household accounts but housekeepers do not like to keep them, any more than men like to keep personal accounts, for accounts require persistency, they wont balance, and are more or less trouble. Very probably you feel that you are just as careful of the spending as possible anyhow, the money goes, accounts are tiresome, so what's the use? All this is common experience and, as a matter of fact, it is of comparatively little use to keep accounts to show what you have spent. Accounts are valuable chiefly to show that you are spending the way you want to spend, that is according to plan or budget. But records are absolutely essential to the budget plan of spending — it is all too easy to HOW TO LIVE BETTER AND SAVE MORE 5 exceed the budget appropriation in all divi- sions; constant check must be kept on the spending or an ideal budget is of little use. Household accounts are the stumbling block in the way of the budget scheme; but there is a way around this difficulty. Practical Budget Accounting ALL families that use a checking account for paying bills have on the check stubs (if properly kept and not lost) a more or less complete record. Now if the full family in- come be put into the checking account and all expenditures be made by check, even to obtain cash, you would then have on the check stubs or interleaves a record of where all the money went. Is this not so? It is. Then if the interleaves have columns arranged to keep the divisions of expenditure together you would have a full classified record of expenses! Well, all this is provided in the Self-Accounting Check Book, see Figure 4 — of which more later. The Weekly Allowance Book nnO provide for a record of cash expendi- -■- tures and for families or individuals not using a checking account, a miniature account book has been designed which is quite simple and small enough to be carried in the pocket- book so that records can be made at the time of spending . This simplifies matters. See Figure 5. After keeping the records for a month or two, you will know what you are spending, have some idea of what you must spend in the various divisions and can begin to get ready to decide what you loant to spend and how you shall apportion your income to yield the greatest satisfaction and savings for your par- ticular family. Then you can draw a tenta- tive budget, try it for a few months, revise, try it again and finally in the course of a year THE ART OF SPENDING or so begin to achieve success in "The Art of Spending" — to live better and save more. Family Team- Work nPHE third requirement for living on a ^ budget is to insure full and complete co-operation of all members of the family. The whole family must plan together and the full family income for the year should be con- sidered. Nothing draws man, wife, and chil- dren together so much as having a common purpose in the family spending and a united "pulling" toward a definite aim. Planning the spending of the entire income for the year instead of spending as you go for this, that, and the other thing as the im- pulse or need arises, just naturally leads to more balanced spending and tends to reduce thoughtless, useless, wasteful spending. It is exceedingly easy to fritter away in nickels, dimes, and quarters (to say nothing of the five- and ten-dollar bills) a surprising amount of money — a sum sufficient to realize many of the family aims. The Housekeeper's Allowance Plan IN MANY families it is the custom for the husband to turn over a definite sum weekly or monthly as a "housekeeping allowance," out of which the wife or housekeeper is sup- posed to pay for food, her own clothing and personal expenses and sometimes for the clothing of the children. The man pays the rent, insurance, life insurance, taxes and all unexpected expenses such as doctors' bills, for repairs, new equipment and so on. He "holds the bag." Such a system is much better than no system at all but has certain disadvantages, foremost perhaps in that it does not allow for consideration of the family expenses as a whole. It prevents the woman from seeing and understanding more than her part of the HOW TO LIVE BETTER AND SAVE MORE 7 expenditures and from having a broad view of all the family finances. The household allowance may be disproportionately large, tending to make for extravagance and one- sided expenditures, or it may be too small, making it necessary for the housekeeper to skimp in her spending unduly and giving a feeling of unfairness. But the chief objection to the housekeeping allowance plan is that it stands in the way of a thorough-going budget system which considers in full the family plan of spending and saving. "Housekeeping is a business; husband and wife are equal partners. The entire income from whatever source should be mutually shared and directed by both partners. . . . The wife should share the responsibility for the financial success or failure of the family."* Objectors to The Budget Plan T^HERE are two types of people that stand -■- in the way of the family budget plan — the "bountiful provider" husband and the "cling- ing-vine" wife. Both are a bit out of date in this day and age. To the Bountiful Provider: You probably have a feeling that as you produce the family income that you should decide on the spend- ing of it. No doubt you have occasionally made a few remarks on the lack of business management in the home and on extravagance in general. But who would you say is usually to blame for extravagant wives and daughters and spendthrift sons? And is there any way to learn the value of money except through experience in using it? Well, here is a chance to put the family finances on a business basis and give practical training to all in the" family in "The Art of Spending. You will remain, naturally, chairman of the board of directors of family finance, and believe me, "laying all the cards on the table *Mrs. Christine Frederick in Household Engineering. THE ART OF SPENDING face up" and letting the family budget put the limit on the family spending is much more effective than any amount of preaching on saving and economy! Let the budget show that the money spent for "fancy eats" cannot also be spent for a new hat. If daughter "simply mast have a new dancing frock," the budget may show her that Dad will have to go without a new business suit, which sjie knows he needs — badly. The budget scheme may take quite a burden off your shoulders. To The Clinging Vine: It's very com- forting to have every want provided for and have no financial cares; then again it's not so agreeable to have to ask for money and bill- checking time is not so pleasant. Of course, you cannot expect to be a financial partner unless you are willing to take your share of financial responsibility. Partners are equally liable in business, you know. That means being sure that you have the money to spend before buying — getting away from the "charge it to husband" habit. The wife should have the spending end of the marriage partnership — no man can work to full efficiency or produce as much income as he might who has to take on. the details of the family spending and carry all the load. Some years ago, when the dollar was worth 100 cents, in a budget exhibit was shown all that could be done on a thousand dollar in- come; an observant man was heard to remark, "Yes, but that would take a five-thousand dollar wife." Well, why not be that kind? As Mrs. Ellen H. Richards has put it— be "a productive citizen of the state, not a social debtor." HOW TO LIVE BETTER AND SAVE MORE DIVIDING THE INCOME A QUESTION often comes in like this, "We -^"^ have an income of $300 per month, how much should we pay for rent, food, clothing, etc.?" As I have tried to show, there is no an- swer to such a question. It all depends on the family and its aim; but family aims and wants <' 600O Fig. 1. Division of Income, $2,000 to $6,000. Expenditures for Rent. Clothing, and Operating remain nearly constant — Food expenditures are greate the smaller the income. From Household Management-TcrTiW. are more alike than they are different and a great deal of study has been given to family budgets, usually based on the "statistical fam- ily" of man, wife and three children under four- teen. The chart shown in Figure I , was designed by Mrs. Ellen H. Richards and illustrates the general laws governing division of expendi- tures. As you will see the proportion spent for rent and ^clothing, remains constant and for operating, nearly so — about one-sixth the income each. But the lower the income the greater is the percentage that must be spent for food and the less that can be spent for advancement, investment and luxuries. With 10 THE ART OF SPENDING minimum income nearly one-half the expendi- tures must go for food. Rent here means rent of a house; the rent of an apartment in- cludes much of the operating expenses. Another diagram designed by Miss S. Agnes Donham, who has had much experi- ence in budget making while with the Savings Division of the First Federal Reserve Dis- trict, Boston, is illustrated in Figure 2. In this scheme, savings is taken from the income first and the balance divided into five equal portions — food, clothing, shelter, operating, and "higher life" or advancement. Then, with a moderate income, the segment for food must be increased and the amount spent for advancement or shelter or clothing or operating must be decreased. This scheme visualizes the division of income and is more easily grasped than the usual percentage figures. It shows very clearly that extra money spent in one division must be taken from some other division. Classification of Expenses n^HE Cost of Living by Mrs. Ellen H. Rich- -^ ards, written about twenty years ago, is a pioneer work on the family budget. Her classification of expenditures in the division of income are Food, Clothing, Shelter, Operating Expense, and "Higher Life." In the Higher Life division is included Savings and Invest- ment, Education, Recreation, Health — all ex- penditures "that contribute to mental, moral, and physical well-being." Mrs. Christine Frederick in Household Engineering has divided "Higher Life" into Advancement, Savings, and Luxuries. This last is the classification used in the Household Accounting Check Book, with an additional division. Personal Allow- ances, which seems necessary in any practical workable family budget system. HOW TO LIVE BETTER AND SAVE MORE 1 1 What Are Luxuries? THERE is no sharp dividing line between advancement and luxuries, but in general, advancement corresponds to Mrs. Richards* definition — "that which contributes to mental, moral, and physical well-being,'* while luxuries are nonessentials — expenditures that the family or individual can get along without and retain Fig. 2. The circle represents a division of an income of $2,500 a year. $500 is set aside for savings and the $2,000 divided into five equal parts of $400 each. As more must be spent for food, $200 is taken from higher life and $40 from shelter. From Budget-Making for Ike Home, issued by First Federal Reserve District Boston. efficiency, health, and happiness. Of course, a considerable proportion of the family income can be and often is spent for luxuries in food, clothing, shelter, and operating. Here is where "The Art of Spending" calls for cuts to provide for more savings and advancement. Expenditures for luxuries are, of course, entirely legitimate; indeed many of the neces- sities of today were luxuries only a few years ago, like the telephone, running water, bath tubs and modern plumbing, as well as central heating, lighting and labor-saving equipment. In general, the progress of a people may be measured by the luxuries that become neces- sities. Someone once said in jest, "Give us 12 THE ART OF SPENDING the luxuries of life and we will dispense with the necessities." But it is very easy to over-spend for luxuries and expenditures in this division must be kept within bounds. The purpose of a budget is not to reform the manner of living of the family, except in so far as you are "shocked into reform'* by your monthly records; the real purpose of the budget is to draw attention to relative values and make the spending conscious and deliberate rather than casual and governed by impulse. The Household Accounting Check Book FIGURE 4 shows a portion of the interleaf of the recording side of the Household Accounting Check Book. Each interleaf pro- vides for recording fifteen checks and is followed by five sheets of checks, three to the page. This makes a convenient sized book about 7 inches wide by 8^2 inches long and it con- tains 300 checks, sufficient to last the average family about a year. The first pages give directions for use and at the end is a table for the Yearly Summary by months and another table designed to help in drawing up the family budget. On the reverse side of the interleaves from the check record, provision is made for a classi- fied record of. receipts as illustrated in the upper part of Figure 3. At the bottom of this page is a table for the Monthly Summary, with provision for sub-divisions under the main divisions and for a comparison of what is spent with the monthly budget, as is shown in the cut. The following sub-divisions are suggested in the "key": Key to Subdivisions SAVINGS 1. Savings Account, etc. 2. Life Insurance. 3. Payment on Bonds, House, etc. 4. New Buildings or Additions RECEIPTS Month OF QJutlxA. 1920 r rmom r¥S. MTEBCST OIVIOENOS .»., TOT«l (aT 4^ 1^ 3;r X\ 1^ >' 1 1 ; ' , — -" ~" ^~~ ■^ — "*" ' — MONTHLY SUMMARY OF EXPENDITURES, SAVINCI fOOO CIOTHIMS OPERATiNG ADVAHCEU't LUXURIES PERSONAL sue-Divismn 1 50 00 ao y>% |0 oo Wn 00 \0 H^O ^?, f) "^ 00 .. 2 »3 oW *?\ '^S m 00 IM 50 10 00 7 If 3 • t 51 \^ M\ Jo \o oo 3 »o y so 4 34 XO *1 ITk A'O «r 00 1(> t."* 4 OO 5 S §o ^ SQ TOTAl TOTAl 0 oo do oo Vo oo <^o Oo -30 00 Vooloo PtttS 0* Mmw u L±- jd kl. ill lo^ loj mJ ^ kii lit! i_4j ^ ^ 43130 Fig. 3. Receipt side of a portion of an interleaf of the Household Accounting Check Book showing receipt record and Monthly Summary of ELxpenditures with sub-divisions filled out and compared with budget appropriations. FOOD Dry Groceries, Sugar, etc. Meat, Fish, Fowl, Eggs, Cheese Fruit and Vegetables, Fresh and Canned Milk, Cream, Butter, Ice Outside Meals Man's Clothing Wife's Clothing Child A Clothing Child B Clothing Child C Clothing Rented Rent Business Carfare Fuel CLOTHING SHELTER Yard Owned 1 . Interest, Insurance, Taxes 2. Business Carfare 3. Fuel for Heating 4. Repairs and Decorating 5. Yard Expenses OPERATING Fuel, Light, Water, Telephone Wages: Service, Laundry Elxpense Equipment Repairs, Replacements, Up-keep Income and Personal Tax, War Taxes, Insurance Miscellaneous ADVANCEMENT Educational: Tuition, Books, Magazines, Papers, Stationery Health: Physician, Dentist, Medicine Church, Red Cross, etc. Music, Theatre (Movies?) LUXURIES Tobacco, Candy, etc. Personal Service Entertainemnt, Travel, (Club Dues?) Gifts, Tips, Flowers, Jewelry, etc. Auto Expense, Taxi PERSONAL Man's Personal Allowance Wife's Personal Allowance Child A Personal Allowance Child B Personal Allowance Child C Personal Allowance 13 MnNTH OF OA-^ W1 71,* U.30 iH8-sb • >a.'3o 10-31 "» L^^.^K WW. Qi =t \« .%\ ao4.b5 *? "S^ /0-A1 V<>^.30 ^'o,oo 9o.7-i' 9?.^'? 9y.?o V/.9/ V ?.^'J 34.4y am . Voy.bs \n^A>ii,« hT to £.. VT„-t,* (^rt^y So .00 3s V bb- b-0.00 • • • • ' • IVl fOR &tx..tiA;^j,rwc^ "ix,^* Tti(\ 4,0.00 5.q4.b^' • • to-oo • ' • IV? Vo» R^^-Y ' ?-i TO GxA (f).g£i}. 10.00 a-Sf't-"' 3.tz 1-40 3 -so • W-48 /l-J -ii^J^A^l.-..v...g, J 1 ^ L — 1 Fig. 4. Check Record of a portion of an interleaf of the Household Accounting Check. Footing the columns at the end of the month gives total spent and classified division of expenditures. As the sub-divisions in the Monthly Sum- mary are numbered, it is obvious that those suggested may be modified to suit the require- ments of each family or individual. The main divisions are the important part of the budget — keep only the sub-divisions that may seem of value to your particular family. In recording the checks, something must be put in to indicate the sub-division. For ex- ample, the first check drawn as shown in the illustration was for dressmaking and the (2) indicates that it was for Wife's Clothes. Note also the distribution of the last check recorded —drawn for cash— $10.00, of which $3.62 went for groceries at the "Cash and carry," $3.50 to the laundress, entered under Operating, $1.40 for Dress (4)-Child B Clothes. The balance, $1.48 was put into the Personal column as a part of Wife's Personal Allowance. For emergencies, blank checks may be de- tached from the back of the check book and carried in the pocket-book. When such a check is used, keep memoranda of the amount, to whom payable, and for what; enter this in the space of the check next to be drawn, then detach the check and carry in the pocket-book 14 HOW TO LIVE BETTER AND SAVE MORE 15 CHIC>^GO ILL 3,0^ riRST N /WTOOROEROF ^yU^^f-t-L^ -