Personal finance: Surviving on a low income
Why do some low income families say their income is enough, and others think it isn't?
The Social Policy Evaluation and Research Unit (previously the Family Commission) interviewed 72 poor people to find out, searching for the magic formula allowing families to live sustainably on a pittance.
Sadly, the study of people with at least one child, and household income of between $22,000 and $55,000 a year before tax (more than half brought in $40,000 or less), found there was no magic formula.
In fact, I am sorry to say that many of the "Low Income 72" who said their income was "enough" also said they had times where it was "not enough".
Enough means having a few beans set aside against inevitable but unpredictable extra expenses like broken teeth, car break-downs, illness, shifts of accommodation, etc.
What the study found was that low-income families are experts at scrimping, saving and making do.
They hunt for clothes in op shops, eat cheap food, train themselves to go without, skip meals … the kind of awful, stressful, grinding going without, and making do with less that are the hallmarks of being on a low income.
The study found no association between attitudes to debt and reported income sufficiency.
And, it didn't look like families which said their income wasn't enough lacked the social and family networks the poor rely on to get through the hard times.
But the report provided some useful insights.
It said families with regular, predictable low incomes were more likely to say their income was enough.
The "irregular contract/temporary work" imposed by our "flexible" labour market has made life hard for many, leaving them unable to predict their hours and income.
People with better financial management skills were more likely to say their income was enough.
But for me there's another message in the voices of the Low Income 72, and I hear in them the cry for cultural revolutions on several fronts which would make life, and getting ahead, that little bit easier for those on lower incomes.
One parent reported her child had hidden a birthday invitation from her, as the child knew the family couldn't afford the birthday present. Bless that child for her goodness and character.
But remember, it's not so long ago that the only thing a child expected from another at a party was help eating the cake.
No-one felt poorer for it.
Christmas puts similar stress on those with low incomes, the Low Income 72 said.
It's mad that Christmas can be allowed to eat the savings families need to cope with emergencies, so roll on the counter-Christmas cultural revolution.
And then there are the lavish weddings and funerals that blight some households' finances, and the tithing to family and church while the fridge is bare.
Cultural revolution comes from people who have had enough of cultural norms that are hurting them, and those they love.
One of the Low Income 72 talked about a sister who "got herself set up first with a house and a job before tithing to other family members".
Many, the commission reported, felt that more should be like her.
• Improve your money skills
• Seek regular income
• Resist calls on your cash
- Rob Stock is a business journalist with the Fairfax Business Bureau and money editor of Sunday Star-Times
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