Wednesday, February 25, 2009

The Bottom Line

When creating the Jewish Economics Survey, one of the difficulties was deciding which questions to ask. There are obviously countless areas of life where people spend their money, and it's both impossible and would have been very annoying to ask each and every one of them. Instead, the survey predominantly focuses on expenses that one might consider "bottom line": Mortgage or rent, insurance, car payments, utilities, food, clothing, tuition, household goods, and the like. In addition, it added in a few expenses that are very common, particularly in the Orthodox world, such as hair care, shul membership, and entertainment. Finally, it asked people to list "other expenses" on their own, and this has been very interesting and telling in seeing what some included and what others did not.

One of the major purposes of the survey is to demonstrate to people just what it really costs someone to live as an Orthodox Jew in different communities. Quite often, in trying to encourage people to spend less, we will show them where wasteful spending is and to learn to treat different items not as necessities but as luxuries. This is obviously extremely important, and a major part of the problems we face as a community stem from wasteful and extravagant spending. One need only read an Orthonomics post from yesterday discussing a family's asking for tzedakah to "make sure" that they are not embarrassed to not be able to give their daughter and new son-in-law the wedding they "need", complete with cufflinks, Judaica, and the like. This prompted an excellent essay by Ariella of Kallah Magazine decrying how the sense of entitlement people have has turned people from focusing not on cutting out non-essentials, but on how to find someone to pay for it - ignoring that that money could have had other, more positive uses.

Cutting from the top down only goes so far, though. Most people view themselves as responsible with their money, and will be quick to agree that the examples of waste that are cited are wasteful, and of course they wouldn't spend in those ways. But even so, most people still are slightly off in their own calculations of their monthly expenses, and particularly among young couples, there's a disconnect between their expectations as to what they'll need to cover their expenses over the next few months or a year and what they will actually need.

Often, the biggest impetus for people re-evaluating their priorities and sense of what is and is not essential is an awareness that they have to. The only way to have this awareness is to have some idea of what they're actually spending on just the basics, those primarily fixed costs that are gone before they even start on the rest. Once people are aware of just how much those numbers add up, they suddenly find on their own ways of reducing most of their other costs and expenses, or realize that they need to seriously increase their income level.

By establishing and demonstrating just what the baseline incomes people need to get by and cover the most basic expenses, and then showing just how much that line increases when they "move up" to bigger apartments or houses, or when you add in even the more common non-essentials, people will slowly start to have this awareness. One of the nicer aspects of the survey is that simply from taking the survey, which sticks just to basics, close to half the respondents have noted that it gave them a greater awareness of just how much they are spending. One of the plans is to eventually use the survey to demonstrate to the greater Jewish community just how much we're spending off the bat, so we can understand and refocus our communal structures and institutions to fit within what we can actually afford. Only by establishing a solid economic foundation do we have a chance at actually having that "growing, thriving Jewish community" we so often talk about as if it is actually true. In reality, we're struggling greatly and it is impacting our growth and hurting our future.

We need to establish and understand our Bottom Line, so we can build off of it.

Please, if you have not already, take the Jewish Economics Survey. If you have, please pass it along to family and friends. Thank you so much! And again, sites like and Quicken Online are incredible [free!] tools (we and a number of friends use Mint and find it to be fantastic; another friend tells me he loves Quicken) that can help you get a better handle on your expenses and just how all your money comes and goes. Check them out.