Earnings and the Minimum Standard of Living

According to research carried out by the Joseph Rowntree Foundation, in 2011 families will need to earn 20% more than they did in 2010 to achieve the minimum acceptable standard of living.

The Joseph Rowntree Foundation looked into how much different categories of people need to earn to achieve what is considered an acceptable standard of living. It suggests that a couple with two children would need to earn on average 18,400 each (36,800 between them) if they both work, or if only one is working s(he) needs to earn 31,600. To achieve this standard of living single people need to earn 15,000 and a lone parent with one child 18,200.

Exactly how much is needed is a fairly ambiguous debate as different people have different opinions as to what is a “minimum” standard of living, as well as what is realistic. The part of the country that someone lives in is also relevant. For example, this research takes rent as being for a council house / flat, and it is not realistic for everyone earning the amounts outlined above to be entitled to a council property. In reality many will need to pay double this amount in rent (adding between 3,000 and 5,000 a year in rent alone).

So, what is the definition of the minimum standard of living?

According to the Joseph Rowntree Foundation’s research it includes UK holidays (but not holidays abroad), Christmas present, basic mobile phones, and a computer and the internet. It doesn’t, however, include child care, something that is essential for families where both parents are working or single parent families where the lone parent is working. The basics that are included are things such as food, clothes, accommodation, utilities, fuel, household goods, personal goods and services, transport, and social and cultural activities.

An adequate standard of living has been described as, “a minimum in Britain today includes, but is more than just, food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society”.

It can be a little complex. It is sometimes hard to draw a line between what someone needs and wants. For example, UK holidays are included but you don’t need a holiday to survive. Bizarrely the minimum standard of living has been described as including “film tickets, a bottle of wine and a bird feeder”. These are also not essential for survival. Some may argue that the internet and a car are far from essential. Others would argue that the only way they can get to work is by driving and that they need the internet to do their job, thus making is essential for their particular circumstances. The standard of living could be described as being what you need for a relatively comfortable lifestyle.

The cost of living (especially amongst low and middle earners) is generally thought to be increasing. A basic basket of food has risen by 43% in the last 10 years, … READ MORE

Top 10 Tips to Creating a Budget Surplus

1.)The first thing is to see if you have a surplus or deficit. People get into credit card trouble when they have a deficit. This is achieved by tracking.

2.) Your goal is to run a 20% surplus each month and save to 3 months of your survival number explained below. You will need

3 months survival money in a money market account. That way if your ever in a financial emergency you have 3 months to get back on your feet.

3.) Write Down all incoming money. Pay check’s, rebates, refunds, reimbursements, everything that comes in, add up every month.

4.) Count how much money is spent each month. This will be the total amount that is out-going every  the end of 3 months divide this number by 3 and that will be your survival number.

5.) Divide your out-going money into 2 categories. The 1st is hard expenses and the 2nd is soft. The difference is items like rent or a car payment are fixed, or hard. Soft items are like groceries that can change every month.

6.) Look at all your hard expenses and attack each item with the intent of lowering. If it’s rent, ask your landlord to lower. If it’s a cell phone bill, call and ask to lower. If a car loan, attempt to refinance a lower rate or payment.

7.) On your soft expenses, make a goal to lower each by 20%. So if your spending $500 a month on average on groceries, work to get this to $400.

8.) The function of counting incoming and outgoing money is compared to a business profit and loss statement. Add your money coming in and subtract the out going. The goal here is to create a surplus and invest this for the long term.

9.) If you have no revenue and a deficit you will need to work hard and soft expenses to the point you have a surplus. This could be a life changing event depending on your deficit. Work hard at this.

10.) If you have a surplus and revenue it’s time to disburse intelligently. Pay down all Consumer credit card debt to zero. Start with the smallest balances first to clean up house and then the largest with the highest APR next. Then you can start sending money to your survival number account and your on your way to financial fitness!… READ MORE