There is a term thrown about in reference to those people who are employed but still in poverty, the “working poor“.  According to this article from CNN, 15.1% of Americans were considered poor during 2010.  However, a closer look at the graph shows the annual household poverty level to be $22,314.  In 2011, the HHS Poverty Guidelines have a similar amount listed for a family of four.  How many of you make that amount (or less) with a family of four (or more)?  I have a family of six, for which the annual income is listed as $29,990.  Again, this is a poverty guideline.  What does this mean?  It means that according to the government, a family of six making an annual salary at or below the above is considered “poor” or living in poverty.

Now, before I move on, I want to interject that just because the government defines my family as “poor” does not mean I define myself that way.  I recognize that my financial means are limited, but I do not (most days) feel poor.  I have a wonderful family that I love dearly (and who love me right back!), a rather large network of fabulous friends, access to resources I trust when times are tough and so on.  I have been way worse off than I am now and for that, I am incredibly grateful.  🙂

So, back to this working poor thing….

Yesterday, I had our taxes done.  I usually do them myself, but this year decided to consult a pro to make sure I wasn’t missing anything.  While ruminating on the way home about our refund, I got to thinking about our annual income.  I generally only think of our income in monthly (or less) terms, as that is how I do our budgeting/bill paying.  Most paydays, I think “Oh wow!  That’s a lot!” when seeing the amount.  Seeing our yearly amount sort of gives off a different feeling; I find myself torn between shock at the small amount and awe that we have so much with so little.

According to the figure above, a family of six operating at poverty would have an income of $29,990 or less.  Since I have a family of six, it’s easiest for me to figure out what those expenses look like.  For this post, we’re going with $25,000.  Here’s a breakdown of how that money gets dispersed with the necessities only.

Annual *gross* income: $25, 000

Annual necessary expenses:

– Rent: $5820

– Electric: $1200

– Water: $840

– Fuel: $720

– Vehicle Insurance: $300

– Food: $4800

Total:  $13680

Excess: $11320

So, in this example, the family has $11320 in disposable income.  Wait!  Remember when I said necessities only?  Take a look at those figures.  I included only insurance and fuel for one vehicle, the one used to get back and forth from work.  I also didn’t include anything extra for the home, including trash pick up, internet, phone or the like.

Let’s look a bit closer at that “disposable” or extra income.  What’s necessary?  I did NOT include things that most people consider necessary, such as clothing, toiletries, etc. because some of these can be acquired through free means and/or are not *truly* necessary to daily survival, although most of us probably prefer to have somewhat fashionable clothing and plenty of toilet paper.  I also didn’t include birthdays or other times when gifts might be expected.  Those seemingly small items can really add up.  How much do you spend on toilet paper, clothes or shoes each year?  What if your child gets sick and needs to go to the doctor?  At a minimum of $80 per office visit (the base cash-pay fee), a few illnesses a year will knock out that “extra”.  There are so many little things that come up, many of which are easily taken for granted.  In our family, for example, a baby was born and the toddler had dental work, the combined total coming to almost $8,000.  That would immediately bring the disposable income down to $3320.

So, the next time you get impatient being stuck behind a mom filling out her WIC vouchers or laugh at that person driving around an old clunker that’s literally falling apart, think:

Could you manage on that amount?