A recent PBS Need to Know episode paints a vivid portrait of what it means to be “Living on the Financial Edge.” Watch it and see how a working-but-poor family makes difficult trade-offs every day and month, living on $35,000 a year - well above the federal poverty line of less than $20,000 a year for a family of 3. The mother spreads out her medication rather than taking it as prescribed, the older son works all day without lunch, with a paycheck spoken for before it’s even earned. They have no savings and can’t look to the future, needing to devote all their energies to daily juggling.
Women’s Initiative seeks to help low-income women achieve financial self-sufficiency, but what exactly does that mean?
“To be truly economically secure, and leave poverty behind for good, people need enough money to be able to pay for the basics like rent, food, child care, health care, transportation, and taxes, and enough money to develop savings and assets.” Insight Center for Community Economic Development
In considering the situation portrayed on Need to Know, the family income wasn't enough to cover all its food or health care costs, much less the ability to save – and that’s at an income level nearly double that of the federal poverty guidelines. As the Insight Center describes, the federal poverty guidelines don’t reflect a meaningful measure of what it actually costs to live. The calculations don’t consider the costs of rent, child care, transportation or health care. The calculation is based only on the cost of food, which is assumed to be 1/3 of a family’s total cost of living, with no variation by region. Do you think milk, bread and eggs cost the same at a grocery store in San Francisco and Indianapolis? Neither do I.
The Insight Center has an online Self Sufficiency Calculator for California on its website, which paints a better picture of what income would be required for economic self-sufficiency. For San Francisco County, the annual income is around $48,000 for a family of 3 adults – more than $13,000 more than the family in Newark, NJ. And food costs are estimated at less than 1/5 of monthly income, unlike in the federal guidelines. According to the US Census Bureau, which uses the federal poverty guidelines, there were 46.2 million Americans living in poverty in 2010. Imagine how many people live below the much higher standard of true economic self-sufficiency.
For women driven to own their own businesses, Women’s Initiative can help. In addition to teaching women the necessary business skills, Women’s Initiative training covers personal financial literacy skills, similar to some of what was described in the Need to Know program. Women need to know how to avoid the pitfalls of the financial system, generate income and start to build savings to achieve self-sufficiency.
