A good modest income in the area that I live in is around $40,000 or $20.83 hourly wage and most families make less than this. For a typical family with children, this gives you an estimate of $35K after taxes, so you need to budget for that amount. I did figure in a state income tax since most states have it and also figured in the tax return and/or deductions/credits for children.
Always give God his 10% first! I'm estimating costs here and these may vary depending upon location and other factors. This is just to show you an average budget for a family living on this amount a month with no debt.
*This is not my family's budget or income, I'm simply providing estimates for the average, lower-income family.
Budget - $35,000 = $2,917 a month
Monthly Budget for $2,917 (after taxes)
Offerings - your choice but estimating $50
Savings - $100
Rent - $730
Renter's Insurance - $15
Electricity - $100
Water - $25
Garbage - $25
Phone - $30
Internet - $60
Food - $275
Toiletries - $120
Life Insurance - $10
Gas - $250
Car Insurance - $80
Maintenance - $100
Health Insurance - $350
Dental Insurance - $60
Medical Bills - $100
Entertainment & Clothing
Fun Money - $75
Clothing - $25
You can see that in recent years, health insurance has risen so high that it is almost impossible for families to afford it at all. With this budget, I estimated total medical costs at $510, which is actually cheap insurance, so you have to pay deductibles and co-pays throughout the year and that can eat up your savings. Obamacare jolted prices upward, and they are becoming to where there is no way a family can afford to pay for them and this brings up the question about is it ok to use medicaid?
At this income you are putting in savings $1,200 a year + any interest. That comes out to about $6K in just 5 years and $12K in 10 years. If you live in an area like mine, which I blogged about here, you would have to put most of your "savings" into your rent or cut expenses elsewhere if possible.
Having an emergency fund set up should be your first goal and it is generally recommended that that should be $1,000. Then a savings for 3-6 months in the event your husband loses his job or becomes disabled and the rest you can invest. If you don't put aside 10% for these things or live so that you can do so, you will find yourself turning to a credit card or other debt. Stay chain-free and build wealth!! I recommend Dave Ramsey's Total Money Makeover for anyone who is unsure how to budget, save or is in debt.
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