My family of three operates just under the U.S. poverty threshold. Here's a look at our financial situation and budgeting strategies.

Many believe that mastering money management is all that's needed for those in poverty to improve their circumstances. This perspective neglects the harsh realities of low wages and the generational cycles of wealth and poverty. As a low-income parent, I wanted to examine my family's budget for clarity, and to share what living on a limited income truly entails. (Spoiler: we don't own the latest smartphone!)

I'm a freelance writer and artist, while my wife is a cook at a nearby restaurant. Neither of us holds a college degree. We have a small child and three cats. We rent our home in Detroit, where the cost of living helps us manage. However, our city's lack of effective public transport leads to higher transportation costs compared to other areas.

Financial Overview

Income: My income averages $993 monthly before taxes, while my wife's brings in about $829 after taxes, resulting in a total monthly income of $1,822. These figures fluctuate; our yearly household income is around $22,000.

Currently, our monthly expenses tally up to $1,995, indicating an average monthly shortfall of approximately $173.

Here's a breakdown of our expenses:

  • Housing Costs: $982
    • Rent: $650
    • Utilities: $332
  • Fixed Expenses: $530
    • Internet: $79
    • Groceries: $400
    • Entertainment (Netflix and Amazon): $20
    • Phone: $31
  • Variable Expenses: $483
    • Pet Supplies: $90
    • Transportation (bus, taxis, etc.): $134
    • Dining Out: $179
    • Miscellaneous Household Costs: $80

Unexpected Discoveries

The deficit surprised me. I used to excel at budgeting and even helped friends learn the ropes. Since becoming self-employed, however, my busy schedule has made it hard to track my spending effectively. I suspected we had some tough months in spring, but I thought we'd break even overall. Realizing we're in the red highlights the need for me to dedicate time to budgeting.

Behind the Numbers

These averages come from the first half of 2017, which was a particularly challenging period. In March, I fell ill and couldn't work, leading to increased food expenses since I couldn't cook. In May, my wife accepted a new job that pays slightly less but allows her to spend more time at home with our child, enabling me to freelance more. This change has gradually increased our monthly income, but it hasn't been instantaneous.

This month, I'm on track to earn more than ever from freelancing, but we're still catching up. While I'm grateful for the financial improvements, we remain in a precarious position, just one unexpected event away from serious trouble.

Frustrations

Two areas of our budget are particularly frustrating. First, our internet bill is too high. We initially signed up for an introductory rate, but the price has risen, and I haven't explored cheaper options. In the context of our overall budget, it feels absurd to be paying so much for a service that could likely be reduced.

The second issue is our dining out expenses. I knew we occasionally splurged on takeout, especially when I'm facing deadlines, and I sometimes work from coffee shops, but seeing the numbers laid out reveals just how excessive it's become.

Achievements

After our child was born in 2015, I lost my job, leaving my wife to support us solely with her prep cook salary, which proved unsustainable. In 2016, I began freelancing, starting with just $400 a month. Now, I'm thrilled to be earning more than twice that amount, contributing significantly to our family income.

This work also led us to move from an unsuitable apartment into our current home, which is a much better environment for all of us. I'm finally approaching my writing as a business and planning substantial changes for the upcoming year, aiming for a smoother financial future.