The article states that low income Americans are spending far more than they earn, forcing many to dip into savings, lean on family or go into debt. Those in the bottom 30% of the income scale make and average of $14,000 a year, including the value of many government benefits like food stamps or disability payments. But they spend more than $25,000 or 182%, of their annual income mostly on basic needs like housing, food and transportation. "People are either making impossible choices or turning to high cost credit or going into debt to meet basic needs" said Melissa Boteach, vice president of the Poverty to Prosperity program. The middle class isn't doing great, either. Their annual income just barely tops $54,000 and on average they spend more than $48,000, or 89% of their earnings a year. While the rich earn $166,000, but spend only $101,000. Keeping a roof over the poor's head is the hardest challenge according to the article, but it eats up 72% of the poor's income. Even affordable housing is a challenge for the poor. Only one-in-four families receive affordable housing. Also, 28% of the poor's income go to food and most of the time food stamps do not last the month. So what can we do to help the poor? Affordable housing is one of the most underfunded federal safety net programs the United States has, what can we do to change this?
8 comments:
Definitely questions that need answers to them and soon. Recent discussions in some states to limit what food stamps and federally allocated funds can be used on for families would only further tighten this grip on the lives of the poor. Also I'm glad that this article talks about transportation and other needs. People often talk about low income individuals as if food stamps ought to take care of everything but subsidizing one outlet of life doesn't mean that other parts of life becomes more affordable. One thing that can be done in order to help the low income individuals from suffering or being dependent on government funds is to raise minimum wage for adult workers so that the combined yearly wage would be at or above what is considered a 'livable' wage, meaning families can afford to feed, clothe, educate, and transport themselves, in essence to fulfill their basic needs.
Thanks for the statistics. I think that debt financing should be harder to receive and the lower income brackets should be given advice on financial planning and learn how to increase their income over time. Unfortunately, after earning low income for years, people in those brackets are less and less motivated to move to a higher tax bracket and it turns into day to day survival.
Will very interesting article. I think America does a poor job educating it's citizens on financial issues they will face throughout their lives which makes it very difficult to be financially successful. There are no real structured classroom settings that can teach you how to open a bank account or take out a mortgage or educate you on the importance of credit but instead we learn Newton's laws and about how to graph on three dimensional planes in high school. Although this may seem academically important I believe it is not applicable to needs later on in life. There should be an institutional change for financial education in the classroom.
I agree with Matt. Most of the students at my high school were pretty uninformed about personal finance. I was lucky in that my parents were accountants so they taught me a lot, but that isn't the case for everyone. I think it may be worth investigating whether it is worth it to give incentives to school districts for teaching personal finance. But until that educational investment starts to pay off, one option would be to raise wages, but another would be to cut tax rates, or expand the tax brackets so more individuals are taxed at lower rates.
I think Brian makes an interesting point. I personally feel as though personal finance classes should be offered in school just so that more people are educated about their decisions upon graduation. I also feel as though welfare and other such programs should be monitored better and not as much aid should be given out.
Nicole and Brian seem to be right. People graduate from high school, and even college, still with the lack of knowledge of these basic skills that are necessary in the real world.
I agree with the above posters that there is a lack of education of financial management especially among the younger generation which leads to a lot of similar problems as mentioned in the article. So the US government should provide financial management skills to its citizens so they can safely invest their or save their money and not face the risk of loosing everything.
I think the students of the future definitely need to be better informed when it comes to personal finance. I think this is the root behind why some families get so over extended with their finances and why credit card debt is at an all time high. People are not properly educated on what they can and cannot afford.
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