Assignment: Minimum Wage Budget Analysis Worksheet 2

Assignment: Minimum Wage Budget Analysis Worksheet 2

Assignment: Minimum Wage Budget Analysis Worksheet 2

Assignment: The objective of Worksheet #2 is to design a budget for the same single-parent family of three that was part of Worksheet #1. However, this time the family has a fixed income equal to the 2024 minimum wage for the State of Illinois. Continue to consider yourself as an adviser to the family.

In Worksheet #1: Living Wage Analysis, you completed calculations linked to a living wage. If you have not completed the first worksheet, please do not start this worksheet. It is important to complete Worksheet #1 prior to beginning this Worksheet #2.

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As you probably know, the minimum wage is not necessarily a living wage. In Illinois, the minimum wage, effective January 2024, is $14.00/hour for workers over age 18. By contrast, the minimum wage in Indiana is the same as the federal minimum wage of $7.25/hour.

If you multiply the 2024 Illinois minimum wage by 2,000 hours—40 hours/week, 50 weeks/year (two weeks buffer for unpaid sick days)—this equals $28,000/year. For many and probably the majority of you, your Living Wage Salary calculations were higher than $28,000/year. On the national level, the official poverty line in 2023 for a family of three was $24,860. If we divide the poverty line number for a family of three ($24,860) by 12, we end up with a monthly budget of $2,072. If we presume $14/hour, the monthly budget is $2,333. With 10% deducted for FICA taxes (Social Security and Medicare), that leaves about $2,100/month for expenses

For Indiana, just a few miles away, the monthly budget relying on minimum wage would be just over $1,200. Our family will remain in Illinois.

Your challenging task for Worksheet #2 is to figure out how you are going to cut expenses from your Living Wage Analysis (Worksheet #1) budget calculations in order to stay within the $2,100 monthly budget. The family situation is the same for both worksheets: single parent family of three (two kids, ages 10 and 3), living in south suburbs, not wanting to use government assistance.

On the next page, the budget categories used in Worksheet #1 are listed again. Keep in mind you have a fixed number of dollars, based on the assumption that the working single parent is working full-time and earning $14/hour (gross income), minus 10% for taxes (net income).

Here are some parameters and suggestions for completing the Minimum Wage Budget Analysis:

• Continue to allot money for shelter, food, car and other basic expenses, with the understanding that you have a fixed amount of monthly income.
• If necessary, you can “zero-out” one or more the budget categories (assign a zero to one or more categories); however, homeless shelters are not an option and food still needs to be purchased.
• For Worksheet #2, be creative in what this family needs to do in order to pay the bills. Calculations still need to be accurate and plausible but consider innovative, legal ways for this family to live a quality life.
• Although I think most of us would support and probably encourage this parent to take advantage of government assistance (SNAP, Medicaid, TANF), especially since kids are involved, do your best to not rely on government assistance.

BUDGET CATEGORIES

Monthly Rent                                                  $_________ (smaller place?)

Utilities (gas, electric, water)                         $_________

Daycare for children:                                      $_________ (creative solutions)

Groceries, cleaning/paper products:               $_________ (remains the Walmart/Target budget)

Car expenses (insurance, repairs, gas):           $_________ (still need to have transportation)

Health Insurance (and co-pays):                     $_________ (hard to be creative for this one)

Clothing:                                                         $_________ (keep the thrift stores in mind)

Cable TV/Internet:                                          $_________ (WiFi access still important)

Phone plan:                                                     $_________ (still need only one line for parent)

Entertainment:                                                $_________ (no-cost or low-cost options?)

Miscellaneous:                                                $_________ (still have school expenses)

Savings/Emergency Fund:                              $                   (keep if possible)

Total Monthly Dollars Available:     $2,100           (sum total of budget categories)

Note below what budget adjustments you needed to make in order to move from Worksheet #1 to Worksheet #2.