Budgeting Tip For Low Income Families
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Budgeting Tip For Low-Income Families - Save Something For Yourself
Saving can seem depressing when you make barely enough to cover bills, food, and other needed items, but with a solid plan in place, all this can change. To learn more about budgeting for low-income families, read the articles below.
We recommend reducing your food and clothing expenses, reviewing your cell phone plan and usage, and setting up an emergency fund. But before you get started, you must understand what low income is in the USA and what you can afford.
What Is Considered Low Income in the USA?
The term "low income" has different definitions depending on where you live. In San Francisco, a single person must earn at least $61 an hour to afford a two-bedroom apartment. In North Dakota, a person can make up to $60,340 a year and afford a large home with a yard. The federal government has its own definition of "low income" and uses it to determine who is eligible for assistance and benefits.
A low-income household is one that earns less than the federal poverty level. The federal poverty level is $25,700 for a family of four. This income is often barely enough for a single person to hold down a full-time job. For seniors living on fixed incomes, or wage earners who are suddenly out of work, the threshold can be reached without sacrificing the quality of life.
Moreover, the definition of low-income is not the same for different demographic groups. In 2018, 10.6% of men and 12.9% of women were living in Poverty USA. Among married couples, the rate was 4.7%, while it reached 12.7% for single parents without a husband or wife.
Generally, the income levels of American families fall into two tiers, which are called lower and middle. The income levels for middle-income households range from $52,200 to $156,600, depending on the size of the household and the local cost of living. In the USA, 52% of households fall into the middle-income bracket, while only 19% are considered lower-income. The median income of a family of three in the US is around $48,500, while the median income for upper-income households was $187,872 in 2016.
Set Up An Emergency Fund
To save more money, you should calculate how much you will need in case of an emergency. You can save between three and six months' worth of expenses. For example, spending $50 on groceries every day will translate into $1,825 in a year. In five years, you will have $9,125 in your emergency fund. Alternatively, you can cut out your phone plan and work from home to save more money.
To get started, list down all of your monthly expenses and estimate the amount that will cover those expenses for three to six months. Consider your current expenses, as well as future goals. Set aside a certain amount of money every payday.
If possible, set up an automatic transfer so that a certain percentage of your salary is automatically transferred into a separate account. That way, you won't be tempted to dip into this money without a plan.
Once you have your emergency fund, you must make sure it matches your needs. A full emergency fund should cover three to six months' expenses. It is ideal to have three to six months' worth of living expenses. But if your expenses have risen over that time, you need to re-evaluate your budget and set up automatic transfers into your emergency fund. In a few months, you should have enough money to pay off any bills, including car payments.
Reduce Food Expenses
When budgeting for low-income families, one way to save money is to cut back on food costs. By sticking to a grocery list, you can avoid impulse purchases and spending more than you have. You can also avoid overspending by buying only the items you need for that month's meals. Also, try not to buy unnecessary items at the checkout line. By following a food budget, you can save money on the amount of food you buy each month.
You can also buy store brands instead of name brands, which is usually cheaper. Another great way to save money on food is to cook from scratch instead of purchasing prepared foods. Making breakfast and lunch at home is a great way to reduce food expenses. Alternatively, you can purchase food at discounted prices and cook them at home. These simple steps can significantly reduce your food expenses when budgeting for low-income families. However, they will require some effort on your part.
Review Your Cell Phone Plan and Usage
Review Your cell phone plan and usage when budget-conscious. If your cell phone service has excessive data usage, you can cut down on the amount of data you use by downgrading your plan. You can usually downgrade to a lower-cost data plan without canceling your existing contract. Some providers offer self-service options through their apps, which makes downgrading a snap. By reducing the data plan, you can keep the same carrier and lower your monthly payments.
Consider combining your accounts. You can save money by sharing data and minutes between more than one line. Many providers offer discounts for multiple lines. One line can cost up to $75 a month. If you have more than one line, you can get the same data plan for $10-$20 per line. Don't increase your plan unless you are using all the data. You don't need high-speed data to get all the calls you need.
Decrease Expenses Instead of Cutting Them Out
If you're struggling to stay within your monthly budget, the first thing you should consider is decreasing your expenses instead of cutting them out completely. In general, most Americans live paycheck to paycheck, and this can vary greatly from household to household. But if you want to save money and still afford to live comfortably, here are Ways To Cut Spending On Home Expenses that will help you right now.
Shop with a Grocery List
Having a grocery list makes shopping for food easier. This will prevent you from buying items without weighing the cost. Whether you use a cell phone or a piece of paper, you should always have a list with you when you go shopping. Bring only those items on your list with you. Always avoid shopping on an empty stomach. Stick to aisles that contain only the items you need and never pick up items you don't really need.
Making a grocery list is a great way to stick to your budget and avoid impulse purchases. Make a list for every single item and stick to it! This way, you won't spend more than you need to and will avoid overspending on expensive items or processed foods. If you are buying groceries for your family, stick to your list. This will help you stay focused and prevent you from picking up items that are not needed.
Save Loose Change
If you don't have a lot of money, save it! According to the U.S. Bureau of Economic Analysis, Americans only save 10 percent of their disposable income. Most other nations save 20% or more. You can still save some money for emergencies by taking advantage of free budgeting courses. One such course teaches you how to budget for your family's needs. A budget also helps you build a savings account and a retirement fund.
While conventional wisdom says you should set aside three to six months of living expenses as an emergency fund, this isn't realistic for low-income families. But unexpected expenses happen to everyone. It's best to save some money each month for these unforeseen expenses.
This way, you can meet unexpected costs without destroying your budget and forcing yourself to make hard decisions. When budgeting for low-income families keeps in mind these tips to save loose change.
Start by organizing all your loose change. You can use this money to pay for necessities, like food, or even for the occasional purchase of a small item. Organize the cash receipts by month. Start keeping track of the amounts you save. This way, you can track the actual amount you spend and can see where your money goes. By doing this, you can create a budget for your family's needs and start living within your means.
Put Housing First
Housing First has been around for a few years and has gained recognition as a 'Best Practice' in the United States, Canada, and Europe. Its success has been attributed to the inclusion of housing assistance in the budget of low-income families. The housing assistance budget can be a key component of a family's monthly expenses, but it should not be the only factor. There are other areas in which housing assistance is valuable and must be prioritized.
For example, many extremely low-income families pay over 50% of their annual income for housing, causing them to be at risk of homelessness. The problem has been compounded by the lack of affordable housing, as there are more families with children than ever before struggling to pay rent. While many families struggle to pay their rent even before the housing crisis struck, many more remain homeless or live in substandard housing. Unfortunately, housing problems often result in cascading harm in other areas of a family.
