Answer both of these questions in one document.
- The official U.S. poverty line for a family of four was $24,300 in 2016. Imagine you are head of a four-person household (two parents, one 10-year-old child and one 2-year-old child) that earns 5% above the official poverty line. Your household income is $25,515, or $2,126.50 per month, which means your household is officially NOT poor. Adjust your income for taxation that you would have to pay (e.g. assuming your income is mostly from labor market earnings, you would pay Social Security and Medicare taxes, and potentially federal, state and local income taxes).
How would you allocate your remaining income to make ends meet? Draw up a budget that covers all of your major expenses (housing, food, childcare, transportation, clothing, utilities, healthcare and health insurance, etc.), using realistic prices for your local area.
In a brief (400-600 word) first section of a reflection paper, answer the following questions: When you created your budget were there any major expenses you will be unable to afford? What are some expenses that you chose not to provide for your family? Why did you choose to provide other expenses instead? What do you think are the consequences of not having those expenses provided?
- What was your households equivalized income when you were 15 years old? Equivalized income requires that you will first answer the question, “How much would your household have earned when you were 15 years old?” To answer this question,identify and sum all the income sources for your household (earnings, pensions, welfare benefits, etc.). Next, you must adjust that amount for inflation into 2015 dollars using this website: . The median household income for the U.S. in 2015 was $56,516. Once you make these calculations, you will be able to think about your household income when you were 15 years old in terms of today’s dollars.
In a brief (300-500 word) second section of a reflection paper, answer the following questions: Reflecting on your household income when you were 15 years old in terms of today’s dollars, what would be the ratio of your households income relative to today’s median household income? Does this ratio correspond to how you understand your familys relative economic standing? If so, why?
