A Budget Simulation
Break into small groups. Have each group take one of the representative families (family details on next page) and make a monthly budget based on the information we provide here. In some cases, choices must be made about housing, transportation, food costs, or child care.
Discussion Questions:
Can the family make ends meet? What challenges and struggles do they face?
After the budget and accompanying discussion is completed, share the amount the family could receive through the Earned Income Tax Credit (EITC), as well as the list of ways families have typically used their EITC benefit.
Discussion Questions:
How might you envision the family spending their EITC benefit? How would additional credits for children help the family? What continuing challenges do they face? How will our letters this year help these families?
Earned Income Tax Credit (EITC), lump sum one time per year
The Smith Family: $5,351
The Rogers Family: $4,100
Typical Uses of the EITC:
- food/groceries (stocking up)
- utility bills
- medical bills
- car repair
- reliable car purchase
- car insurance
- better housing (first and last month rent, security deposit)
- moving costs
- appliances
- appliance repair
- child care
- debt (credit card or other)
- rent
- children’s school needs (school supplies, underwear, socks, shoes, clothes)
- helping family members
- savings for emergencies/repairs/future needs**
**The families in this exercise cannot save their EITC benefit without it counting against their SNAP (food stamp) benefit. This is a source of frustration for families who participate in programs with asset limits.
Rural Family*: Joe and Beth Smith, three children ages 3, 6, and 9
- Jobs:
Joe travels 40 miles each way to work; Beth is three miles from work. The family has considered moving to a larger city, but housing and child-care costs would be significantly higher. - Joe’s Income:
$11 per hour ($1,907 per month; $22,880 per year) - Beth’s Income (part-time):
$7.50 per hour ($487.50 per month; $5,850 per year) - Housing Costs:
$550 per month, plus utilities - Food Costs:
$650 per month (USDA estimate for a low-cost, lower nutrition meal plan for a family of this size. Better nutrition, including fruit and vegetables, would be substantially higher.) - SNAP (food stamp) Benefit:
Varies based on other costs, including child care: With $350 child care: $398 / with $250 child care: $353 - School Lunch:
Free for older children; no breakfast program exists. - Transportation Options:
1 car (200,000 miles, $75-250 per month in car repairs, 13 miles per gallon)
$6,500 car available for possible purchase (90,000 miles, 30 miles gallon)
1 bike
Gas (use current costs/gallon) - Child-Care Options (part-time)
Licensed Center: $350 per month (includes learning activities)
Unlicensed Neighbor (watches two other kids): $250 per month - Debt:
Unpaid heating bills: $300 (cold winter); Medical bills: $600
City Family*: Alicia Rogers, two children ages 2 and 4 Her husband, Jason, left the family after the stress of a year of unemployment. He remains unemployed and depressed.
- Alicia’s Income:
$10 per hour ($1,733 per month; $20,800 per year) - Housing Cost Options (heat included, but not other utilities):
Safer working-class neighborhood: $850 per month (walking distance to work and day care; two miles to grocery store)
Transitional, higher-crime neighborhood/1 Bedroom: $600 per month - Food Costs:
$415 per month (USDA estimate for a low-cost, lower nutrition meal plan for a family of this size. Better nutrition, including fruit and vegetables, would be substantially higher.) - SNAP (food stamp) Benefit:
$526 per month (no increase for higher child-care costs since all child-care options max out the deduction allowed) - Public Transportation Options (kids ride free):
Unlimited 30-day pass: $80
Trip Fare: $2 (4 trips per day to work and child care)
Taxi (grocery store stock-up trip): $12 each way - Child-Care Options:
Licensed Center: $1,500 per month (includes learning activities)
Family-based, unregistered: $1,200 per month
Elderly neighbor: $850 per month (less than $5 per hour for both children)
*Notice what this budget does not include: No toiletries or diapers. No visits to the dentist or private health insurance. Little travel beyond work-related transportation. No car insurance. No clothes. No donations for church. No recreation or movies. No sports equipment or toys for the children. No school supplies or school-related costs (parties, field trips, special activities). No birthday or Christmas gifts.
Use these resources to make the Budget Simulation exercise even more interesting or to create additional family situations for your region.
Budget Calculator:
www.bread.org/budgetcalculator
Source: National Center for Children in Poverty
Earned Income Tax Credit Calculator:
www.bread.org/eitccalculator
Source: Center on Budget and Policy Priorities
Food Cost Chart:
www.bread.org/foodcost
Source: United States Department of Agriculture
Food Stamp Calculator:
www.bread.org/foodstampcalculator
Source: North Dakota Health Department
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