Wednesday, January 22, 2014

Budget For a Family Living On $40,000 a Year

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)
Tithe -$334
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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Unknown said...

Just a thought. We tithe off the gross, government (taxes) doesn't come before God.

Anonymous said...

Danielle - thank you for pointing the finger, but we DO pay off the GROSS and I made a mistake in this post with that.

Schwarzen Family Missions/To Sow a Seed said...

I love looking at different budgets-- especially taking into account regional financial differences! In our area (PNW), a three bedroom home starts at about $200,000 and rents for about $1500/month. On paper, it seems completely impossible that our family of 10 can live on my husband's firmly "middle class" income. And yet ... we do! God's provision is awesome!

Anonymous said...

Thank you Schwarzen Family - I actually do live in the PNW! :-) We are about an hour from Seattle, WA. I blogged about the housing costs here: The rent for a 3 bedroom in our area is around $1100 at the least, but we got a miracle in housing because we pay way less than that for a 1400sqft 3bd2bath with a yard. God always provides doesn't he? That is awesome, thanks for sharing your story!

Anonymous said...

I'm super psyched that I just figured out how to make it on $2450 a month net in the same area!

$330 tithe (off gross)
$833 mortgage
$162 high deductable medi-share ministry
$108 car insurance
$169 cell phone
$150 electricity
$88 water/sewer
$21 garbage
$60 phone and internet
$175 gas
$350 grocery/other stuff

Not much room for savings but at least now staying at home is a realistic possibility!

Anonymous said...

That is great, thanks for sharing adidok! :-)

Anonymous said...

I believe you made a mistake in your math when it comes to tithe. First your estimation was not of $50.00 is not clear, but if you were estimating at $50 a week which is extremely high for the average family, the yearly total would come to $2600 annually. When divided by 12 that makes it $233.34 a month, not $334.00. Perhaps this was a typo? And second I don't know anyone who can make a contribution that high every week. I know I couldn't especially if I was trying to feed a family of 6 or 11.

Also your remark about Obamacare has nothing to do with the subject of budget. I do believe religion and state are supposed to be separate. You should be keeping "your" political agenda out of general postings.

Anonymous said...

Thank you for anonymous for your observances and critique! However, you are wrong - let me explain the math to you:

Income is $40,000 a year gross
- 10% Tithe of that would be $4,000 a year
- Divide 4,000 by 12 months and you get: $334 a month

So yes, what I had was correct, $334 a month in tithe. I'm not sure where you got your numbers? Maybe you got confused by looking at the offering amount of $50 a month, which is something separate from tithing.

God was a part of the government in the beginning in America as you can see it was in many of our legal documents that the founders created. It is also on our money, in our pledge for our flag and songs about our great country!

Obamacare goes against what this country was founded for. It forces others to buy a product. Obama told many lies to get it passed, like "you can keep your doctor" of which many have and are finding out that is a lie. My parents have lost their good doctors recently and so have many others. Lies....this isn't what anyone should be having an agenda promoting right?

Thanks again, glad I could help you!

Unknown said...

I just found your blog and eagerly compared your budget to ours. Even though we are older and live in a different part of the country, the percentages are very close. Thanks for reaffirming our resolve. I could not agree more with your observation on Obama Care. The founders of our country never intended for us to be a Godless nation; they wanted our citizens to have a choice of religions. Thanks for your blog. I will be reading it often.

Anonymous said...

Thank you for the comment Candy! :-)

steppin up said...

So, when you have a family,how can you spend $25 a month on clothing, that's not even one pair of shoes. Even if you switch your "fun money" and clothing, it barely makes sense. To even get one haircut you're looking at least $20,but the time you add in a tip even at budget places. What about school costs and fees for music or sports?

Anonymous said...

Hi steppin up - I'm not sure if you were mocking or genuinely wanting to know but I will give you the benefit of the doubt and assume you really want to know.

We use our yearly tax return to purchase clothing for the family and so the $25 a month is for things that come up that we didn't expect. Recently we had this happen, my daughter needed a new pair of sneakers as hers starting falling apart sooner than we expected. We found a nice pair at Walmart on clearance for $15. I find that when we pray beforehand, God always seems to help us find what we need at affordable prices!

We also homeschool, so I have no idea about what public schools cost for those services like music or sports. For sports, my daughter participated for years in a PE group of other homeschoolers and we paid $1. They did baseball, badmitton, relays, etc. She did ice skating classes for a year and those were affordable as well.

For music, she did 2 years of piano and violin and we found a local homeschool family whose older daughters taught piano and violin and we paid them $5 a week for lessons.

As Christian women, we don't cut our hair, so no need to pay for haircuts for us. My husband gets his hair cut 1-2 times a month for $8 with a $2 tip and I cut my son's hair. Some months my husband gets it cut super short and the $10 cut last all month! Haircuts are included in our toiletries category.

If you make the commitment to do it God's way, He DOES provide in ways that you can't even begin to imagine! He owns it all and He isn't broke - He can make a way!! ;)

Unknown said...

This is a perfect reply to anonymous.

Thanks for sharing this post, it's been very helpful.

Anonymous said...

Thanks Unknown!

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