With the Global Financial Crisis savaging our world’s trade and capital markets people are looking for more ways to scrimp and save in order to whether these tough times. This got me thinking; what are the financial minimums that are required for a person or family to maintain a reasonable level of living whilst still being able to save for times such as these? Of course the government has figures on this since that is what many of the welfare payments of this country are based on, but they don’t really provide any insight into what the makeup of that payment is.
For this blog post I will attempt to explore the minimum costs involved in living as a single person, and then as a typical 2 parent 2 child Australian family. I will draw the majority of my figures from online sources of public information so that there’s as little guesswork as possible.
So let’s tackle the easy one first, the single bachelor/bachelorette, what do they need? I will for the moment assume that they have most things like furniture and appliances, but I will show what would be needed if they don’t:
Putting this all together gives us a total of $371 or $404 if they are just starting out. If we want to save about $50 a week this means their yearly income will have to come to somewhere between $25,000 and $30,000 a year. This does not take into consideration unexpected things like medical bills, which would put that further up the scale to $35,000.
Looking towards the family we can take that yearly income and double it just for starters (2 adults). A child costs about AUD$800,000 to raise from 0 to 17. Putting a weekly figure on a weekly basis is a whopping $980 a week, or almost $2000 for the 2 kids. I’m going to scale that figure back to about $700 since there are savings to be made on housing, clothing and food in a family situation. It is still a phenomenal cost, which brings the family income up to a required $150,000 per year, or $75,000 per parent. It’s no wonder that Australians on the average wage with a family will be doing it tough.
I’ll be honest and say that I wasn’t too surprised by the single people figures, but the family ones really blew me away. I’m fairly well off, but if my fiance wasn’t working because she had a child we’d be below my required income threshold, putting us in an awkward position. It’s really quite telling about the current economic situation as the ones who are losing their jobs are the least likely to have savings, due to the costs they incur just to survive.
Taking this into consideration I believe that a portion of the economic stimulus package should be used in either increasing the minimum wage or cutting tax for just the lower to middle income brackets (of which I’m not a part of, so there’s no vested interest there). Whilst I don’t need to explain what tax cuts would do for the lower income brackets I should mention what I mean by raising the minimum wage.
The government could provide subsidiaries or incentives for minimum wage earners. This could come as a payment to both the employer and employee, along the lines of Newstart allowance. This could even be done with a reform to the current welfare system, changing the income thresholds for wage earners who are on Newstart allowance or similar.
Whilst I don’t believe that all of the stimulus package is going in the wrong places I do believe that its target is a little fuzzy. Sure some of it is well placed (aligning with my objectives pretty closely) however there’s a lot of places where money is going and no tangible benefit is being projected. Whilst I can understand that such legislation has probably be done a little hastily you’re still talking a good $42 billion of Australia’s dollars, which requires a little more then 2 months thought into spending.