|Gary Foreman is a former Certified Financial Planner (CFP) who currently writes
about family finances and edits
The Dollar Stretcher website
http://www.stretcher.com. You'll find hundreds of FREE
articles to stretch your day and your budget!
I am in such a bind - I don't know what to do.
I do not live luxuriously by any means. I work full time and make about $45K a
year. I own my own condo, I have no car payment, and very few expenses other
than standard utilities, food, phone, etc., and my kids. I have two older
daughters, both 21 (one lives here with me along with her boyfriend and one year
old child). My other daughter lives here as well and goes to college full-time.
I also have a 12 year old. None of them gives me money. I have a lot of debts
that are very old - old credit cards, old utility bills, etc. I am having an
extremely hard time making ends meet. I don't go out, I don't shop, I don't go
to the movies or out to dinner. I don't spend my money foolishly, yet it seems I
never have enough money for my bills, never mind anything for me personally. I
haven't taken a vacation in ten years. I am becoming very bitter about working
so hard my whole life and feeling like I have nothing...Do you have any
suggestions for me? I must be doing something wrong...
No wonder Deena's tired! She's trying to support
a family of six on a single income. Not to mention the old debts that demand
attention. According to the U.S. Statistical Abstract, the average family of
five or more people spent $52,565 in 2003. With an annual income of $45,000 it's
understandable that she doesn't have money leftover at the end of the month.
She has some special expenses, too. Based on the
USDA Cost of Raising a Child Chart she'll spend $3,953 on food, clothing,
healthcare and miscellaneous items during a toddler's second year.
And, there's the daughter in college. According
to CollegeBoard.com, if Deena's daughter is going to a public two year college
and living at home, tuition and fees cost $1,905 in 2003. They're certainly more
What can Deena do to close the budget gap? She
can increase income or reduce expenditures.
Either the young mother or her boyfriend should
be contributing to the family income. Even a minimum wage job will bring in
hundreds each week.
Anyone not working outside the home should help
reduce expenses inside the home. That includes both the 12 year old and the
shopping and preparation is an excellent source for savings. The "average"
family of 5+ members spends $8,178 annually on food. They can start by creating
a weekly menu based on the grocery store ads. There's plenty of hands to help
with the cooking. That should eliminate the need for restaurants, fast food or
pizza deliveries. Proper meal planning, along with the use of coupons and a
price book could cut their grocery bill by 25%. Not only will they be saving
money, but the younger members of the family will learn a valuable skill.
The combination of at least one extra income and
a reduction in expenses should provide Deena with some financial breathing room.
Getting her family to participate will probably
be harder. Like many parents, Deena seems to be having trouble getting her adult
children out on their own. By some estimates roughly one third of all singles in
their 20's live with their parents.
It's hard for Deena. Protecting our children is
part of parenting. But so is teaching them to be self-reliant. At some point our
'help' actually disables them. They need to know that they are capable of
running their own lives. And part of that process is getting and keeping a job.
Being responsible for earning your living expenses is another part.
She can help her older daughters create a plan
for their financial independence. For the college student it might include
living at home until she graduates, but a different plan if she drops out of
school. For the young mother and her family it would include finding employment,
creating a budget and moving to an apartment.
Deena will need to explain to her 21 year olds
that they need to contribute to the family. And, that if they don't contribute
that she'll ask them to leave. That won't be easy to do. Deena may be concerned
that if she tosses her daughter, boyfriend and baby out that they'll be
One way to avoid that is to help them with their
plan and make them complete the necessary steps that will lead to their
independence. Deena may want to bring in a financial adviser. Especially if she
has a hard time standing firm with her children.
When Deena's kids were small she helped them take
their first steps knowing that they'd fall and she'd help them up to try again.
The stakes are a little higher now, but the principles are the same. As parents
our job is to teach them to walk on their own and encourage them along the way.