“Money is a tool. Used properly, it makes something beautiful; used wrong, it makes a mess!”
Bradley Vinson
Though it is said that the love of money is the root of all evil, there is no escaping the reality that money allows for shelter, food, healthcare, and more of life’s necessities. Unfortunately, many Americans struggle to make enough money to get by on and live beneath the nation’s poverty line. This is notably true for our nation’s homeless.
It is difficult for our youth living on the streets. These young men and women, whether they have run away or aged out of the foster care system, most likely have not developed the life skills necessary for knowing how to manage budgets and credit.
According to wehavekids.com, the average yearly income of a working, aged out foster child between the ages of 18 and 24 is less than $700 per month — far beneath the country’s average of $2500 per month for this same age group. For many of our homeless youth, stable employment is a dream rather than a reality. With no credit history, money, or employment, many will turn to begging to get by.
Finding the proper assistance from the government and charities as well as seeking gainful employment are important to stay well fed and sheltered. There are many resources that you may not be aware of, but one of the most powerful things you can learn is how to practice positive money skills.
Why You Should Care About Money Management
It takes time to start saving enough money to be able survive independently. While many homeless or impoverished youths are never given a good time to learn how to be fiscally responsible, it is never too late to learn to care for your money management as you advance through life. Whether you are about to age out of the foster care system, or already have, and once you have looked into ways to get guidance with job training and help finding employment, it is time to build a solid foundation for your future.
Money can be spent as soon as you get it or saved for larger purchases. It is important that young people in the foster care system or those experiencing homelessness think about money for their immediate, short-term, and long-term goals.
It is paramount to teach young people about the difference between instant gratification and long-term ambitions. Learning to buy less expensive items rather than their more costly counterparts is one way to save money for more important things like paying for a security deposit on an apartment.
Budgeting Your Money
Using a budgeting app can help young men and women learn to appropriately spend their money. Most apps have three sections: income, expenses, and savings. You can make a list of immediate necessities, items you will need in a few months, and what you will need in the long term. You can then add in what your estimated income is. This includes SNAP benefits, supplemental security income, income from any assistance programs you are part of, and income you receive from any employment. You will be able to see where you spend the most money and what you can do to save more, such as making adjustments to your discretionary spending.
Income
If you have any income, whether it is government assistance or money you earn from a job, it is useful to consider exactly how much you are receiving and when it comes in each month. The goal is to figure out a realistic amount of income you can expect from employment, student aid if you are signing up for college, and any support you might receive from local, federal, and other organizations.
Expenses
It is easy to underestimate how much money it actually takes to survive. You need to figure out exactly how much money you will need to spend each week on food, shelter, healthcare and medications. Learning how to prioritize your expenses is an important part of building toward your future.
Managing Credit
Though credit cards and loans seem tempting, especially for homeless and struggling youth who have no reliable source of income, these cards can be a major pitfall. A lot of times it seems like the best option is to use a credit card or take out a loan so you can afford the essentials, without thinking of the long-term consequences. Everything you spend on a credit card or from a loan, you will have to pay back eventually, and you won’t just be paying back what you spent, but you’ll be paying it back with interest.
Credit card and other lending companies charge interest in order to make money. This means that if you take out a line of credit for $100, you will be expected to pay back that $100 in a period of time, along with whatever extra interest has incurred, depending on what rate you get. Sometimes this can end up being more than the amount you borrowed!
For those with no credit history, credit card companies will charge you a higher interest rate because they know that you have no other options for credit lines.
Though the short-term goal is to get money immediately, you could be paying for it far into your future if you don’t make credit card and loan payments on time. Your credit score has an impact on your future housing prospects, loans to purchase a car, and can even be a factor in being hired.