Struggling to make ends meet is not exclusive to low income families but it is true that the bulk of the suffering is found within their income level. While the plight of the people in this salary bracket is cause for concern because of their financial troubles, you need to pay more attention to the youth that is coming out of these families.
Evidently, being a financial success will be hard to accomplish if you are coming from a low income family. You do not get the money that you need to go to college unless you saddle yourself with huge amounts of student loans – if you get qualified at all. When you want to start your own business, you do not have capital that you need to start one. The list goes on and on for the young ones but before we dwell into that, let us look at what the statistics have to say about the families within this income bracket.
Study shows that low income families are increasing
The Population Reference Bureau published a report that proves how low income families are increasing in the last couple of years. Their report quoted a couple of studies and surveys that gives rise to this claim. Here are the highlights of this report:
The 2011 American Community Survey conducted by the US Census Bureau revealed that the number of low income families increased to 10.4 million in 2011 from 10.2 million in 2010. It is said to be ⅓ of the total working families in the country.
The US Census Bureau cited that the low income families increased to 32.1% in 2011 compared to 28% in 2007. At the same time, the poor families also increased from 8.1% in 2007 to 10.6% in 2011.
The Low-Income Working Families: The Growing Economic Gap, revealed that the income gap is increasing between the low and high income families. The low income threshold in 2011 for a family with 2 children (total 4) is at $45,622.
People way below the line of poverty ($22,811 annual income for a family of four) is earning through employment – not benefits.
All of these give us a view of the struggling American household and their quest to rise above the low income families that they grew up in. Even if the financial difficulties may be brought about by the economic situation and the crash in 2008, coming from low income families is proving to be difficult for our youth.
In a report published on the US Department of Health and Human Services, they revealed a couple of interesting statistics about the Youth from Low Income Families. Apparently:
20% of those coming from low income families are charged with a crime by age 24. This is higher than those from middle income (16%) and high income (12%) families.
10% of youth coming from low income families get a 4 year college degree. This is much lower than the middle income (28%) and high income (50%) families.
7% of young females from low income families have a child before age 18 – higher than the 2% from middle income and 1% from high income families.
Obviously, something is coming out wrong for the youth of low income families. One can question how they can possibly gain financial success with such a poor outcome statistic.
How to move up the ladder to a successful financial life
While it may admittedly be more difficult, it is not hopeless. There are certain factors that can contribute to your financial success and the Pew Charitable Trusts gave a couple of them. Based on the study titled “Pursuing the American Dream” in 2012, low income families can rise a step higher in the income bracket with the following:
A college degree
Dual income families
No unemployment experience
The report cited that 86% of degree graduates, 84% of dual income families and 64% of those with continuous employment conditions left the low income bracket and moved on up.
One thing is for sure, you need to work really hard to get yourself higher on the income ladder. While the percentage of people reaching the middle or high income status is small, it remains to be possible. If there is none in the family that can work alongside you and you do not have a college degree, that does not mean you can forget about increasing your income level. You can always choose a second job to earn more money.
If you are ingenious enough, you can find a way to increase your monthly income and be on your way to be a financial success.
Tips when you get a higher financial status
While increasing your monthly cash inflow is relevant, it is not the only thing that you need to be successful financially. It is not just about what you can do to earn more money. It is actually what you will do when you get an increase in income.
Some people work very hard to earn more money but they end up not feeling financially successful because they treated their income the wrong way. Instead of using the increase wisely, they kept on updating their lifestyle. While there is nothing wrong with that, you have to understand that the upgrade means you get to spend more to finance your new lifestyle. If you moved to a new home or you bought a new car to compliment your income increase, these will require a higher monthly expense from your budget.
It is true that you deserve to enjoy the fruits of your labor, that has to be done wisely. One thing is for sure, upgrading your lifestyle is not the foremost of your tasks. Here are some things that you may want to consider when you finally jump up to a higher income level.
Revise your budget. One of the first things that you should do is to look at your budget and revise it. By starting with this, you take a look at your current expenses to see which of them may need to be upgraded. For instance, if you have debt payments, you can prioritize this so you can get out of debt faster. If you budget shows that you are saving for your home’s down payment, you can decide to put your money here.
Decide if there are areas in your life that really need to be upgraded. This is when you decide if you will upgrade your lifestyle or not. Our suggestion is to keep it in moderation. If there is nothing wrong or restricting about your way of life at the moment, then do not change it. Don’t fix it if it is not broken. You can indulge in the occasional movie date if you had to let that go in the past but make sure it is in your budget. That way, all the changes will be within your means.
Come up with a new saving goal. If your life is comfortable as it is and you do not really need to upgrade anything, come up with a brand new saving goal. It can be a new car that will replace your old one. Instead of getting an auto loan, just buy it in cash. Or it can be a vacation. Save up for it instead of relying on your credit card to finance your purchases.
These are only a few of the things that you can do to help yourself rise up from your low income beginnings and into financial success. Make smart financial decisions and keep in mind that you need to work on financial security more than just increasing your income.