How Tight Is Your Family Budget?

Although economic experts say the economy is turning around, my family is still feeling the pinch. Is yours?

According to a recent study, most Americans still have major concerns about the economy.

Researchers created the Survey of Economic Risk Perceptions and Insecurity to measure how many economic shocks a family faces. How many have you experienced lately?

• Getting laid off or losing your job
• Losing more than a month of work because of an injury or serious illness
• Losing health insurance
• Getting hit with major out-of-pocket medical expenses for yourself or a family member
• Paying a lot more for health insurance than you expected
• Getting retirement benefits cut at work
• Seeing the value of your investments (or retirement funds) drop
• Experiencing the value of your house go down
• Getting divorced or separated
• Spending a lot of money to help an extended family member
• Having a spouse or partner die

Researchers discovered that one out of four households saw their income drop 25 percent or more. Half of the households that experienced one of the 11 economic shocks listed above got hit with another shock—or the same shock—within six months. Most of the shocks occurred in three categories: getting retirement benefits cut at work, seeing the value of personal investments drop, and experiencing the value of one’s house go down.

Before the economy tanked, families already were financially stressed. Money magazine did an in-depth look at adults age 25 and older to see which years were the easiest financially and which years were the hardest.

Which group had it the hardest? People in the 35- to 44-age range. Why? Because economically they’re trying to do the most. Many are raising kids, buying a home, investing in a retirement plan, and saving for college. Money magazine calls this age group, “the pressure-cooker years.”

I would contend that the age range should be wider. We don’t parent for only nine years. When you’re helping your older teenager launch into adulthood (whether that teenager is going to college, a vocational school, or getting some other training), you can be financially supporting each child for 22 to 25 years. (Or even longer.)

I don’t know of a single family that’s not on a tight budget. Everybody is financially stressed and strapped. We are not living in economically easy times.

So how can you live with a tight budget without it strangling your family life?

Take charge of your finances. Figure out what’s putting the economic pressure on you and what you can do to ease that pressure. One of the best things to come out of this uncertain economic downturn is that more people are paying closer attention to managing their money better.

  • Once you take charge of your finances, don’t let money worries dictate your family life. Be honest with family members if you’re concerned about finances (and then work together to deal with your money issues), but also make sure that money problems don’t dominate your life. You can still have fun together in free and inexpensive ways.
  • Google “free family fun” and then the name of the major city closest to you. Many major cities now have free guides on the Internet that promote the free family fun opportunities in their city. I’ve also enjoyed subscribing to Family Fun magazine (and have done so for more than a decade). It’s full of creative, fun activities to do as a family (although most of the activities are geared for families with kids 12 years old and younger).

Get creative and work around your money issues. Maybe you can’t afford a weeklong family vacation this year. What’s nearby? Could you drive for one or two hours to an inexpensive or free outing that you’ve never done before? (That way you can get back without having to book a hotel.) My teenagers have been exploring inexpensive activities nearby, such as kayaking or canoeing on a nearby lake, visiting a water park on the other side of town, going to used book sales that our county library hosts, and finding free bike and hiking trails. (With younger kids, keep on the lookout for unusual playgrounds that you may not have visited yet.)

How are you living on a tight family budget?
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Sources:

1. Jacob S. Hacker, Philipp Rehm, and Mark Schlesinger, Standing on Shaky Ground: Americans’ Experience with Economic Insecurity (New Haven, CT: Institution for Social Policy Studies, 2010).

2. Cybele Weisser, “How Normal Are You About Money?” Money, April 2005.

3. Kids and Money, Parentfurther.

4. Bank It.

5. Image via Wonderlane on Flick’r.

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