What surprised me about our monthly budget.
Many people act like money management skills are all poor people need to improve their lot in life, which doesn’t account for low wages and the cycles of generational wealth and poverty. As a low-income person and parent, I wanted to dig into my own family’s budget both for myself, and to give people a little glimpse of what living on less really looks like. (Hint: we don’t have the latest iPhone!)
I’m a 32-year-old freelance writer and artist, and my wife is 27 and works as a cook in a local restaurant. Neither of us has a college degree. We have a 2-year-old child and three cats. We technically live just below the U.S. poverty line for a family of three, rent our home, and do not own a car. We live in Detroit, Mich., a city with a lower cost of living that allows us to get by. On the flip side, because we don’t have a great public transit system, we spend more on transportation than we might in a different city.
Income: Mine: an average of $993 per month, pre-taxes. Hers: an average of $829 per month, post-taxes. That makes our monthly cash flow $1,822. But these numbers are averages – when I looked at it the month-to-month, we were all over the map. Annual household income: Approximately $22,000.
Our monthly expenses currently average out to $1,995, which means that at least on average, we’re running a deficit of about $173 per month.
Here’s how those expenses break down:
- Home Expenses $982
- Rent: $650
- Utilities: $332
- Fixed Expenses $530
- Internet: $79
- Groceries: $400
- Entertainment (Netflix and Amazon): $20
- Phone: $31
- Flexible Expenses $483
- Pet needs: $90
- Transportation (bus, cabs, etc): $134
- Dining out: $179
- Other household expenses: $80
What Surprised Me
Honestly, the deficit shocked me. I used to be amazing at budgeting, so much so that I’ve taught several friends how to do it. But since I started working for myself, I’ve been so busy that tracking that my spending often falls by the wayside. I knew that we had a couple really rough months in the spring, but I honestly thought once everything was factored in, we’d be breaking even. To see that we aren’t proves to me that I need to allow more time for keeping track of my budget.
What You Don’t See
These numbers are averages over the first half of 2017, which turned out to be six very complicated months. In March, I had an illness that made me unable to work. During that time, we also spent a lot more money on food, because I also wasn’t able to cook. In May, my wife took a new job, one that makes her a little less money, but also allows her to be home with our toddler more, so I can do more freelancing. Ultimately, that decision has meant that our household pulls in more money per month than we did before, but that didn’t happen overnight.
I’m on track to make more this month than any freelancing month so far, but we’re still playing catch-up. While I’m glad that our financial status is improving, there’s still no denying that things are tight, and we’re one emergency away from getting really behind again.
What Makes Me Cringe
Two things make me cringe. The first is how much we are paying for internet. When we moved into our current house, we took an introductory rate, but the price has gone up and I haven’t looked into getting a lower one. Looking at it as part of our larger budget, it seems really ridiculous to be paying that much, when something can probably be done about it.
The other cringe-worthy thing is probably obvious, it’s how much we’re spending on eating out. I knew we were prone to the occasional impulsive pizza delivery (especially when I’m on deadline) and I sometimes work at a local coffee shop, which also costs money, but these numbers show it has really gotten out of hand.
What Makes Me Proud
When our kid was born in 2015, I lost my job, and my wife was attempting to support all three of us on a prep cook’s paycheck, and it just wasn’t possible. In 2016, I started writing professionally, and I started out making a maximum of $400 a month. The fact that I’m now making over double that – and half of our family income – is something I’m extremely proud of.
My work also enabled us to move from a very unpleasant apartment into the house we’re in now, which is better for our entire family. I’m now finally able to think about my writing as a business, and I’m on track to make some big changes at the end of this year, which should make 2018 a lot less rocky.
Are you willing to break down your monthly finances for DailyWorth? Email [email protected] with ‘Spending Chronicles’ in the subject line