Benefits in Lent (Week 2) – Accruals Concept

It’s near the end of the week and I have £12.57 left to spend at the Korean restaurant birthday dinner tonight. It has been quite easy this week because I still enjoy the use of my existing stock of possessions and food. This doesn’t cost me any money.

Essentially, I am still living a middle class lifestyle that is far beyond someone on benefits. A fair way to take account of it is the use of accruals accounting. In short, goods and services are accounted for as they are used instead of when they are paid for. For example, I bought three boxes of cereal before the challenge started. Under cash accounting, I can ignore this. Under accruals accounting, I have to account for the one box of cereal I ate during the week.

More information on accruals accounting can be found in paragraph 22 of the IFRS manual.

ifrs_manual I’m going to adjust week 2’s budget under accruals accounting.

List of Adjustments

  1. To account for the consumption of the existing food in my fridge and freezer. Including free food given by my parents
  2. Benefits in Lents does not take account of Oyster card costs because they are assumed necessary for work, however, there’s no adjustment for non-work travel.
  3. To account for use of existing household products, such as my bed, sofa and toothpaste.
  4. Existing use of laptop and TV, assuming an estimated useful life of 3 years.
  5. To account for free beer and sandwiches consumed at a work event.
  6. To account for clothes worn, assuming a useful life of 2.5 years.
  7. Existing use of guitar, piano and the reading of 3 chapters of book. Estimated useful life of 10 years. The book cost £2 and has a total of 14 chapters.

Notwithstanding the disturbing fact that this looks like a spreadsheet at work, I am now over budget by £22.77. This shows that I already have good wealth and income doesn’t matter so much. Those on benefits don’t have such wealth, and need to borrow at extortionate rates to fund a basic lifestyle.

No kimchi for me tonight.

Benefits in Lent

Ash Wednesday marks the start of Lent – the period of time leading up to Easter Sunday. It symbolises the 40 days and nights Jesus spent alone in the desert after his baptism and before his ministry. For this reason, people give up something, or change their behaviour during Lent. In order to reflect on the meaning of Easter.  Traditionally, people give up chocolate. Some more original ideas I have seen are: giving up Facebook and giving up haircuts.

The pastor at my church (crazy) Dan proposed something more radical – living on benefits for 6 weeks. In effect, giving up money. That means living on job seekers allowance, which for me is £63.40 a week. I’ll be starting on Sunday 21 February for 6 weeks, ending on Easter Sunday!

Why?

  • Money for the poor in Greenwich – the money saved from living on benefits will go towards a poor council estate in Greenwich.
  • Reflect on how fortunate we are – we are in the top 1% income bracket of the the world. We should feel like we have enough
  • Deep religious reasons  – which I don’t know about – yet.
  • baked beans
Beans on Toast for 6 weeks (photo by Becky E)

Ground rules

  • Rent and council tax are excluded – because that would be paid for if you are on benefits. It would also wipe out my budget many times over.
  • Travelcards for work is excluded – because you wouldn’t have need for a travelcard if you weren’t working.
  • All other expenses are fair game – water, electricity, television, food, beer and widgets. All of them have to be covered by £63.40 a week.

Are we being annoying goody two-shoe Christians?

Absolutely not. However, I realise that there are criticisms and issues which I be discussing in future blog posts.

Track my progress

As an accountant, I’ll be maintaining an online spreadsheet of my budget and actual spending. Benefits in Lent Link.

I’ve estimated that I have to slash my weekly spend in half. I’ll be blogging about my experience. It’s going to be a struggle. But I will enjoy producing the spreadsheet, doing variance analysis and fancy pie charts.

Accountancy Textbooks from Innocent Trees

On Monday I hauled back about 5 kilograms of accounting materials. I have to look at two thirds of them before my next round of accounting exams in December. The remaining third will be examined in September 2009.

Accounting books

My favourite is the literary classic: "International Financial Reporting Standards 2008" (seen on top).