I don't want to be perfect, just better...

Monday, November 3, 2008

Basic Family Budget Calculator

My official job title is Research Coordinator, which is a great excuse for me to surf the net all day, read news bulletins, and speculate on ways to help people and try to shape policy by writing issue briefs (reading, writing, and surfing the Internet - three of my favorite things).

In my adventures on the net (sorry as I was working, haha), I stumbled across this Basic Family Budget Calculator on the Economic Policy Institutes's website. I gave it a try and I was disgusted by it. My results were for a two parent family with three children living in the Washington, DC region should have an income of $75,077.

This is considered basic?!?! I have several problems with this estimate. Let me say it is possible to live in this region for under this amount. However I see several problems with this estimate

1. There is no allocation for savings. You cannot teach people to be prepared if the first line in the budget doesn't include savings. Remember the first rule of personal finance is pay yourself First!
2. Housing in this area is very expensive. You may be able to find adequate housing for that price but the neighborhood could be lacking in many ways.
3. Transportation expenses vary greatly. I take public transportation to work so I can project a set monthly expense. However with the fluctuations in gas prices and some of the highest insurance rates in the nation, and the fact that you have to pay to park almost everywhere $400 dollars a month is on the lean side. Unless they are figuring you own your car out right.
4. Groceries are only for some, many here eat out almost every meal. You could double that amount for a couple of people I know and it may come close.
5. It does not take into account loan payment like Sallie Mae, or car.

A couple of things they got right are
1. Childcare for a working parent is way too expensive and yes can be as much as rent or mortgage payment.
2. Health care expense are pretty accurate.
3. It has a line for necessities I am hoping this includes clothing, basic utilities (water, electric, gas)

Washington-Arlington-Alexandria, DC-VA-MD HUD Metro FMR Area, MD 2P3C

Monthly housing $ 1,708
Monthly food $ 776
Monthly child care $ 1,376
Monthly transportation $ 401
Monthly health care $ 401
Monthly other necessities $ 597
Monthly taxes $ 997
Monthly total $ 6,256
Annual total $ 75,077

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