Me: Can you budget your way out of poverty? I’ll let you start.
Dad: Can I budget my way out of poverty... I don’t think I can. Basic math; I make $15,000 a year before taxes, means take home is $8,000-$10,000. What bill are getting paid? You are not living in New York, living in poverty at $15,000 a year. It is mathematically impossible. Technically, you can’t, depending on what city you are in. How are you going to save $5,000 a year, only make $15,000 and only bringing home $9,000. You’re going to have to do something else to get above that poverty line.
If you got one job, paying be low poverty, I’m going to get a second job to pay another amount. Then if you have two jobs, you’re not at the poverty line anymore.
Me: How would you know if you need a second job or not without budgeting.
Dad: It’s not even the fact that you don’t know if you.... it’s that fact that you know you can’t get an apartment with your current income. There is no way you can have an apartment making $15,000 a year.
Me: Correct, you would live in a room, you would live with family. So you can... just because you can’t have an apartment at that income, doesn’t mean you can’t budget your way out of. At that income, no you can not have your own apartment in NYC.
Dad: It depends on your living situation.
Me: You will have to live in someone’s basement, or on someone’s couch.
Dad: Even that will be too expensive. My point is yes and no.
Me: Uh Uh, stay with your point and let me rebut.
Dad: You can’t live on your own with that income. You have to leave NYC. Now, we have to debate is how can you budget your way out of poverty.
Me: The reason why I believe you can budget your way out of poverty is because that is what I did. What I realized was, every month at the end of the month, I don’t have enough money. What do I need to do to get more money. The first thing was I was spending money. Miscellaneous things were being purchased that I wasn’t paying attention too. $10 here and $15 there.....
Dad: It’s not a big amount.
Me: Until you budget and see, I have $150 that I could stop spending. Or at least, bring that amount down to $75. That’s number one, now you’ve just found an extra $150 for the month.
Let’s just say you don’t have that extra income every month. You will still see, these are my bills, this is how much income I bring in every month. People that don’t look at their numbers, they never say let me get another job. And if they get another, they still will feel like they not making enough money, because they are not seeing that there is an extra $300 that they are missing through misc. spending. People have a subscription to everything, they spend $30 a day on food, out of convenience.
When you are in poverty, you have to eat rice & beans, spaghetti, peanut butter sandwiches and that’s it until you make enough money. What are you buying alcohol, and going out for? You would have to live on someones couch, that’s the way, make those sacrifices.
Budgeting is the gateway drug to financial literacy.
So how do you budget your way out of poverty? Increase your income, track your money, and keeping your expenses low is a great place to start.