"It's a privilege to be able to budget, because it means you have consistent money coming in and out every month."
"Privilege" is more complicated than a quote or a showerthought can do justice, and for a few people, having a budget not go upside-down is literally impossible without outside assistance.
I'll lay down my own anecdote--my life, and then follow with an example.
I make about 28k a year currently, gross. I save about 7k a year or so.
This means I spend about 21k a year. These expenditures are rent, car insurance, health insurance, taxes, food and necessities, some frivolity, and gas for travel.
In order to make what I make, you would have to work for 75 hours a week for 52 weeks at minimum wage (7.25 an hour).
Let's take someone who grew up in a bad home, who only barely finished high school. They don't have a car given to them by their parents (I do) in addition to the roughly same 21k a year I pay for all the stuff I do and things I need and so on, they need to pay an additional $250 a month on financing for a certified used car (because they won't have enough money to buy a used car in good shape outright of course), which adds up to an additional $3000 a year, bringing total expenditure to $24,000 on the gross $28,000 they're making for 75 hours a week of minimum wage labor.
To make it worse, I'm a student, which means I'm getting taxed at a lower rate than they would be. This would increase their tax burden from about 2 grand to about 4 grand because of the write-offs to which they lack access.
This brings their total expenditure to about $26,000 on the $28,000 they make for 75 hours of minimum wage labor.
Now, because they work 75 hours a week, assuming they sleep for 56 hours a week, they have much less time than I do for things like cooking, cleaning, and so on. This means they probably have to buy more pre-cooked or pre-prepared meals, which means their food expenditure is likely going to be higher than mine.
They also probably won't be able to afford to purchase food in bulk, so they will likely spend more on food than I do.
I spend about $200 a month on food, so lets say they wind up eating out more often than I do and spending extra on pre-prepared foods from the store, putting them at about $350 a month.
This would increase their total expenditure to about $27,800 a year.
Now, finally, I was able to take a lot of things with me from "childhood" that I didn't have to pay for.
About 80% of my clothing, I didn't pay for myself. I have a bunch of furniture I didn't pay for because its as old as I am and I took it with me when I moved out.
My couch was a gift from my parents.
I have a ton of kitchen supplies I didn't need to buy with my own money, etc.
Oh and I might add, my car is in absolutely amazing shape because my dad took immaculate care of it for the last 14 years.
So, lets say this adds up to an additional $50 a month in car repair because the used car isn't in as good shape as mine, bringing us to $28,400 a year in expenditure, and lets also say that this hypothetical person needs as much clothing and furniture as I do. Lets say he bought them for a total of $2000; he took out a loan and pays 6% APR on that loan.
Assuming he pays minimum payments, that will cost him about $15 a month.
Now we're at $28,580 a year of expenditure.
Now, ultimately, also add on things like overdraft fees and check bouncing penalties and late payment penalties and interest accumulation increasing the principle of that there loan, and we can safely assume that this person will never be able to budget in such a way as they can have more money than they spend.
I also didn't include the higher cost of being forced to buy lower quality goods which will break/wear more quickly and need to be replaced more frequently, which is difficult to quantify in the hypothetical.
This person, no matter how well they budget, will either have to give up necessities to make it by, or they will have to push their hours worked higher and risk stress-induced mental or physical injury or illness, or they will have to bury themselves more and more in debt just to survive.
Does budgeting help? Yeah, absolutely. Without budgeting, their expenditures would be on the order of $35,000 a year probably, and they wouldn't have a prayer to even be able to squeeze by by working more hours or by giving up on a few necessities.
Does it make enough of a difference to be able to drag this particular individual out of the cycle of poverty? Nope. Not on its own.
source:https://goo.gl/vzsQUV
OK good post