Budget – Choices (Online writings)

Scenario: You are a single parent living in Pullman. You work full time (40 hours a week) at a local fast food restaurant and make approximately $18,803.00 a year before taxes and other standard deductions (at WA’s minimum wage $9.04). Your annual net salary (what you take home) is around $13,000. You have two kids, ages 3 and 5. According to Federal guidelines, the minimum poverty threshold for a family of 3 is $18,530.00, which means you make too much money to qualify for financial assistance. That means that given Washington’s minimum wage (the highest in the nation), you and your children do not qualify for Head Start, food stamps, welfare checks, subsidized housing, subsidized childcare, or any other federal aid program.

Task: Based on that information, create a monthly budget for your family. Be sure to account for the following: • groceries • rent (in town, $700 for a two bedroom house/apt; out of town $450.00 for the same deal—if you choose to live out of town, you have no option but to own a car and incur in the expenses associated with it as listed below) • car payments/maintenance (if you wish not to have a car, you will need a bus pass—monthly expense $14 for you and $10 per child, a total expense of $408.00 a year). • car insurance • health insurance (no less than $3,000.00 a year for the three of you) • life insurance • gas • child care • utilities • electricity • phone/cell • garbage collection • water • cable • Internet connection • clothing for you and the children • entertainment • school supplies for older child • savings account • children’s College 529 Plans • retirement for you ‘

Things to consider: (1) Some of the things I listed above are optional (e.g., entertainment and cable), but others are definitely not. (2) Although things like clothing and school supplies are not needed on a monthly basis, you still need to budget for them, as this is a yearly salary. Even if you only buy them once or twice a year. (3) Give realistic numbers, for this is a real budget and a real situation for way too many people in our state/country. Finally: That is all the money you have. No “my parents sent me money,” and no “I won the lottery.”

For most people in this situation, those are not real options. In space below, provide a budget and provide explanation for what you spent money on, why, what issues you thought about; reflect on process

 

Thanks to Carmen Lugo-Lugo, who created this assignment
Last day to participate March 15

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12 thoughts on “Budget – Choices (Online writings)

  1. This is a very difficult assignment, mostly because most of us a standard college students and we haven’t had to make decisions as difficult as these ones. But here we go:
    Monthly Budget, total: $1,567

    Out of Town Home: $450 ($1117)
    Health Insurance: $250 ($867)
    Car Payments: $50 ($817)
    529 College Plan: $300 ($517)
    Car Insurance: $60 ($407)
    Life Insurance:
    Electricity:
    Utilities:
    Groceries:
    Gas:
    Child Care:
    Garbage Collection:
    Water:
    Internet:
    School Supplies:
    Savings:
    Retirement:
    Clothing:
    Entertainment:

    So as you’ll notice, the list wasn’t finished. I started calculating everything and I got through about 5 different items and over three quarters of my money was gone. Now it may seem like I giving up on this assignment, and I’ll be honest, I am a little bit. But more than that it really opened my eyes on the difficulty of being a single parent with a minimum wage job in Pullman. Minimum wage is extremely high in Washington so people who work minimum wage jobs in Pullman actually have it a little bit easier than many across the country. I have the utmost respect for those who raise children in these conditions and I’m amazed that they can budget themselves accordingly. This also makes me think about how the government makes decisions about the cut off for welfare, food stamps, etc. because I think that the poverty line may be a little low. I originally thought $18,9000 was high for minimum wage but after trying to calculate monthly payments, I realize it’s a lot lower than it should be. I think the government should reconsider the poverty line, especially in the poorest country in the state of Washington. Then I realize I forgot to account for taxes and get even more stressed out. This assignment was definitely an eye opener and I will be extremely impressed if someone in this class can show me up and complete it. Good luck!

  2. Based on the income that I have I will be able to spend around 1,566 per month and this is how I broke it down:

    In Town Home: $700 ($8,400 per year)
    
Health Insurance: $250 ($3,000 per year)

    Bus Pass: $34 ($408 per year)
    Groceries:
 $65 ($780 per year)
    Electricity: $25 ($240 per year)
    
Utilities: $20 ($240 per year)
    Water:
 $20 ($240 per year)
    Garbage Collection:
 $20 ($240 per year)
    School Supplies:
 $15 ($45 per three times a year)
    Clothing:
 $30 ($360 per year)
    Child Care:
 $100 (1,200 per year)
    College Plan: $10 ($120 per year)
    Life Insurance:
 $20 ($240 per year)
    
Retirement:
 $20 ($240 per year)
    Internet, Cable, and Phone Line: $150 ($1,800 per year)
    Savings: about $90 left over in savings

    It was extremely difficult for me to break down everything because there are many things on this list that need priority over others, but that can be hard to decide on. For example, things like retirement, life insurance, and college plans are obviously very important but you also need to set aside a good amount of money for groceries, clothes, and utilities. It can be hard to decipher what the money should go to first. I decided to give priority to things that a family would need to live a normal day-to-day life such as, water, electricity, a phone line, and groceries. Then, if I had any left over money I would put it towards college plans and life insurance. This obviously is not ideal but when it really comes down to it I had to decide what was more important in the end.
    This assignment was a huge eye opener for me and I cannot imagine having to do something like this just to live. It would be extremely stressful and time consuming to have to map out what you can and what you can not spend money on. People living with only a minimum income should qualify for welfare, food stamps, and subsidized housing because it is really not enough money to live off of. They are clearly working as hard as they can to give their families everything that they need, and sometimes it still is not enough. I think that a person who does this has to be very responsible to be able to manage what little money they have in this way. I had no idea how hard it really is and I have a tremendous amount of respect for them.

  3. For the income given I would budget about 1,544.17/month.
    This is how I would think I would separate my income if I had to.

    Parenthesis means yearly total:

    In town home: $700 (8400)
    Health insurance:$250 (3,000)
    Groceries: $60 (600)
    Bus Pass: $34 (408)
    Electricity: $30 (360)
    Utilities:$ 20 (240)
    Water: $20 (240)
    Life insurance: $20 (240)
    child care: $80 (960)
    garbage:$20 (240)
    cable/internet/phone: $130 (1560)
    clothing: $25 (300)
    school supplies: $15 (2/year 30)
    retirement: $35 (420)
    college plans: $15 (180)
    savings: $90.17 (1382.04)

    While trying to make this list, I kept thinking to myself how little money I was putting into certain categories and couldn’t believe that so many families have to live like this on a monthly and yearly basis. Coming from a family where I don’t really have to think about my basic needs, it really opened my mind to think about those families that have to struggle and worry just to make enough money to make their basic needs such as electricity and water. When I was making my list I put the most money into things that I knew would be most important first, so that way when it came down to the end of my money I wouldn’t be searching for money that I didn’t have to put into important categories. I think that everyone should have to do an assignment like this, because it really puts into perspective how life works for a lot of single parent families and how much people have to struggle because of the minimum wage gap that makes so many families, like the one I created struggle. I tried to do this assignment as best as I could and could not even imagine trying to actually live off of the amount of money provided.

  4. With $13,000 to spend annually, that means $1,567 per month to spend.
    Here is how I would spend my money per month:

    Paid for every month:
    -Rent (In-Town Home): $700 ($8,400)
    -Bus Pass: $34 ($408)
    -Health Insurance: $250 ($3,000)
    -Groceries: $200 ($2,400)
    -Child Care: $150 ($1,800)
    -Electricity: $40 ($480)
    -Water: $35 ($420)
    -Utilities: $30 ($360)
    -Garbage Collection: $10 ($120)
    -College Savings: $20 ($240)
    -Savings: $28 ($336)

    Paid for at different times during the year:
    -Clothing: $50 (4 times per year= $200)
    -School Supplies: $20 (2 times per year= $40)
    -The remaining amount ($70 per month, $840 per year) would be split between college savings and general savings when clothing and school supplies weren’t being accounted for.

    There were a couple things on this list that were necessities whose value was indisputable, like rent and a bus pass. Everything else was technically optional; both having it in general and how much I decided to spend. I decided to spend $200 per month on groceries because for 3 people I believe this is do-able, and I’d want my kids to eat as healthy food as possible. I decided to pay for health insurance, which many people don’t pay for or have, because I believe it is one of the greatest necessities. Lastly I decided to create college and general savings accounts to give my kids the future they deserve, and in case something unexpected were to go wrong. I found this activity pretty eye-opening. Most people I know nonchalantly spend money on going out to eat and shopping, when some people spend that amount of money on things like utilities each month. This made me think about the issue of how many people can’t afford health care because they can’t even afford the necessities in life like groceries and a place to live. There are people who even make less money than this budget allows, which is hard to imagine. It makes me thankful.

  5. Budget: $13,000/year after taxes ($1083.33/month after taxes)

    Rent: $5400 ($450)
    Bus: $408 ($34)
    Groceries: $1800 ($150)
    Utilities (water, electricity, etc.): $900 ($75)
    Health Insurance: $3000 ($250)
    Child Care: $1200 ($100)

    Total: $291.96 ($24.33) left over for clothing, school supplies, etc.

    Obviously, $24.33 a month is not enough to account for things such as internet, cell phones, college savings, clothing, school supplies, entertainment, retirement, etc. To survive on an extremely bare minimum based on only necessities, this is the very rough budget that I came up with. In any case, that leftover money would most likely be used to pay off unexpected expenses or used for emergencies.

    Many people put a very low and unrealistic estimate for items such as groceries and utilities, in which I think they forget to account for the family size of 3 rather than 1. Also, some numbers were off for the way they figured the monthly to yearly costs. Something that people need to remember is that the monthly budget should be based off of $13,000 after taxes rather than the $18,803 of income. You would only be able to use $13,000 in order to pay off expenses which equates to roughly $1083 a month (as compared to the $1566) that people keep using in order to create their budgets.

    The fact that people had a hard time creating monthly and yearly budgets in paying off expenses with an income/monthly income 150% higher than what is supposed to be used exposes the magnitude of hardships that families in situations like these face every day. I cannot imagine the stress and difficulty in managing income down to the cent and worrying about which expense should/can be paid, and which can’t.

    Many people can argue about the expenses I’ve come up with. I do agree that each person brings about different resources and backgrounds which may influence their decisions on what is important and what isn’t, as well as how much SHOULD be allocated to each line item.

  6. Budget: 1567/month Utilities: 50
    Food: 350 Water: 20
    Rent: 700 Garbage: 60
    Bus: 34 Clothing: 50/month
    Health: 250 Savings: 53
    Child: Title XX

    In order to do this assignment I first asked; what can’t these people live without? I quickly discovered this was not such an easy task, giving I had spent almost my entire budget and was no more than half way down the list. After much tweaking, I found the above results to be the closest and most realistic budget for a family in these conditions. To calculate the family’s food budget I looked up the average food consumption of American families and found that a single parent with two kids would consume approximately $350 per month. Most of the other figures are self-explanatory, however for childcare I had to get a little inventive; because childcare is very expensive now-a-days I looked into alternative day cares for the children to stay while the parent is off at work. Because this is a single parent of two, making only 18,803 per year they should be eligible for Title XX, a government subsidy which will pay for the childcare for this parent. My suggestion for this individual would be quit his/her job and get on welfare and food stamps until a better opportunity job arises, the reasoning being that food stamps would eliminate the cost of food and the family will still make roughly the same income living off welfare if not more. If the parent could find a way to make a little extra cash each month it would greatly benefit the family, unfortunately the reality is it can be very hard to find jobs paying above the minimum wage.

  7. With such a tight budget it was unreasonable to be looking at finances from a yearly perspective (this family is literally scraping by on a day-to-day basis not a yearly one).

    With a:
    Take home salary of: $13,000
    This leave a monthly sum of: $1,084
    Rent: -$700
    Insurance: -$59
    Childcare: -$40
    Utilities: -$95
    Bus fee: -$34
    College Savings: -$28
    Cellphone bill: -$25
    Supplemental food: -$50
    Left is: $53 per month
    $636 a year

    One time costs:
    AT&T (Gophone) Cellphone: $54

    The family is receiving healthcare through Life-Wise and is covered for 3 preventative visits a year (each) without a deductible and all trips to ER are covered, including ambulance rides. Due to the low income and single parent of two status there is only a monthly premium of $59.
    Since the family will be commuting purely by bus, and there is not much extra cash for gym memberships, it only made sense for the family to become members of the Pullman YMCA. For only $40, the parent has access to the workout facilities and childcare can be provided while at work. By enrolling the children in a public daycare setting will allow for community connections to others in similar situations to form.
    The college savings account will be in the form of the Gerber Life Grow-up Plan. After 15 years the 5 year-old will have $30,000 to use for college. This gives the child the opportunity to work for a year and think about what they want to go to school for (while making money).
    As for food, not only can the family go to the pullman food bank, but they also qualify for free clothes, shoes, and limited medical and dental services. There is also $50 left to pay for food that is perishable and cannot be obtained at the food bank (produce, eggs, liquid milk).
    The one time cost of the cellphone would have to wait until the second month of budgeting. The plan allows for infinite text messaging, and 250 minutes a month and has full internet capabilities on Wi-Fi, which can be found at any coffee shop (on campus which makes up a large part of Pullman).

    It is horrendous how an individual parent making minimum wage with two young children is exempt from government aid. Regardless of this major setback there are still a handful of resources that are still available at little to no cost (i.e. YMCA, Food Banks, and the Palouse Community Action Center). Through these resources the family would be able to engage in physical activity, have access to meals, food vouchers, clothing vouchers, legal services, and participate in family development courses. When beginning the task of budgeting for this family, my first thought was “how can this family actually begin saving money?”. When put in a financially tight situation there is often the mentality of spending all the money you have just because that’s what one has to work with. I on-the-other-hand, first evaluated the non-negotiables (utilities, rent, insurance, and transportation). My second priority was to establish a plan to save for at least one child’s higher education. This move ultimately dictates the child’s future (and since 63% of jobs last year required at some form of higher education) it would be asinine not to put them first. The problem with food/clothing costs was easily dealt with via the food bank and the Community Action Center. The most difficult expense for me to justify was the purchase of a cell phone. However, it would be unreasonable for there not to be any way to communicate with others as a family in the 21st century. This phone can also be used for internet bill pay, as well as checking e-mails, and calling 9-1-1 if the situation were ever to arise.

  8. The budget is so tight that we have to make a very careful plan to achieve the goal.
    There are $13,000 per year, 1083.33per month.
    Rent(In town):$700 ($8400)
    Bus:$34($408)
    Health Insurance:$250($3000)
    utilities :$70($840)
    left:$29($348)

    It is the total I can spend in this budget. However, it is not enough to live in a normal live. It might be impossible to achieve this goal. If I have this kind of budget, I will try another way to work or get something free. I spend the rent $700 to live in town because I think the car is too expensive for me. The car is include the gas, insurance, repair and service fee. It will make me cost more and more money. Because I live in town, I can easily take the bus to anywhere, it will be cheaper and have no trouble in any time. The Health care is the cost I must pay. Althiugh it is really expensive, I have to pay it. However, I can find the way that can make it cheaper if there is any choice. Utilities bill depend on the season, the winter is so cold that I have to turn on the heat. In this sitution, I have to find the way to get the free meal and the way to take care of the children. I think I have to apply the help from the government. If I get the help from the government, I will have more budget to help children to have a better life, such as children’s College 529 Plans and I can have a Head Start, food stamps, welfare checks, subsidized housing, subsidized childcare, or any other federal aid program from the government. It will be very helpful for the children when they are apply for the college, they do not need to worry too much about the tuition.

  9. As you can see, it is a tight budget, so we have to make a good decision about every single thing. It is what I think:
    I have about $1083 per month
    house(out town): $450 ($5400)
    bus: $34 ($408)
    insurance : $250 (3000$)
    electricity : $20 ($360)
    phone/cell : $10 ($120)
    water: $20 ($240)
    clothing for me and the children : $40 ($600)
    school supplies for older child : $30 ($360)
    food : $90 ($1080)
    savings account : $139 ($1668)
    Well, as you can see. I make the best decision as I can. I spend money on every thing that I have to pay. I still have $139 per month left, so I can pay some things that maybe not enough. For example, school supplies and clothing. Anyway, if I were this guy, I think the best way is find another job. I only work 8 hours a day and I still have a lot of time, I think I will find a job at night or a job work in the weekend. The reason is I only have $1668 left in a year( maybe less), so if me and my children have some troubles or we need money to do some things that we have to do. I don not think that is enough.
    In conclusion, if I only have this much money, I still can alive, just a little bit tight. But I perfer to find one more job to make money.

  10. Based on the income that I had The Monthly Budget: Total $1,532 I then broke down my spending, this is how I broke it down.

    In Town Home $700($8,400 per year)
    Bus Pass $34 (408 per year)
    Groceries $65 ($780 per year)
    Electricity $25($240 per year)
    Utilities $20 ($240 per year)
    Water $20 ($240 per year)
    Clothing $30 ($360 per year)
    Child Care $80 ($960 per year)
    Garbage collection $20 ($240 per year)
    Phone $50 ($600 per year)
    Retirement $10 ($200 per year)
    Heath Insurance $200 (3,000 per year)
    School supplies $25 ($50 twice per year)
    Savings about 10$ left over in savings

    The reason why I spent the money how I did, was because I decided to relocate to In Town Living. Even though living inside of town is much cheaper, you have to put into account for a car and the insurances total cost. It is more to live outside the town, than in town. The Phone is the only extra thing we need, we do not need cable and Internet. All I need is a phone and its saves me some money. I invested into retirement for my future retirement or in case I lose my employment. All other things are necessary and cannot be avoided.

    The Issue that came up during this was deciding on how to spend on what you needed, and still stay under budget this was difficult. To solve this I had to calculate everything that was available and maneuver around to find the best possible way to pay for what I need and stay under budget. I took the maximum amount I could spend on what I would need and wanted and began to cut down and lower the amounts and how much I needed to spend on each one. With doing that it didn’t only help me show me all the number it allowed me to figure and estimate what was important and what was. The other issue I had was making sure everything was within budget and everything was equal in order to provide the best opportunity for me and my kids.

  11. Per year/$13,000, per month/$1,083

    Groceries: $100
    Rent: $450
    Bus pass: $34
    Health insurance: $90
    Life insurance: $150
    Child care: $60
    Electricity: $30
    Phone/cell, cable: $50
    Water: $30
    College: $10
    Saving: $79

    In my opinion, it is difficult that a family of 3 live by only $1,083 per month. In this case, my family is a kind of poor, so we have to save money as possible as we can. So, I chose a rent house out of the city and not to own a car. However, even if we were poor, if I am a mother, I pay health insurance, life insurance, and child care because these are important for 2 kids and useful when something will happen. In my country, almost all people pay for them. And then, it costs too much money to own a car and keep it. But it is too difficult to live only this money.

  12. I made an estimate of this family. The total amount this family can use annually is $13,000. This family can use $1,038 per month.
    Groceries: $150
    Rent: $700
    Bus: $34
    Health Insurance: $20
    Life Insurance: $40
    Child Care: $40
    Utilities: $20
    Electricity: $20
    Phone Call: $25
    Garbage Collection: $10
    Water: $20
    Clothing: $150 (annually)
    School Supplies: $60(annually)
    Saving Account: $20
    College Plant: $10

    The total amount is $1,319. This number is not enough to live because this family can use only $1,038, so it is difficult for single parent to live with two children because the salary is low. Groceries are very important to live. From my experience, I estimated $150. I chose to live in town because it was cheaper than to live out of town. If this family live in town, it is close to go to grocery shops and also this family can go there by bus or walk. If this family live out of town, this family has to pay for car payment, insurance, gas. It costs at least $ 500 per month. Insurance payments cost at least each $20. Child care also pays at least $20 each child. Clothing for two children and single parent cost $150 annually because children grow up too fast, so parents have to buy new clothes. That’s why my estimate is at least $1,319, so it is too difficult to live.

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