Tuesday, October 26, 2010

Living Beyond My Means

When I decided to finish work to do my Master's thesis full time, I knew it would be interesting making ends meet. Since I got back from Peru, I've been seeing how this works out.

I was fortunate enough to be awarded a Master's by Thesis scholarship This scholarship gives me $277 per week to live on. My rent, for my part of a 2-bedroom flat in Northland, is $200. Electricity and telecommunications bills add another $40 per week. That leaves $37 for everything else. Much as I have come see living well and frugally as an interesting and worthy project, I haven't been able to get my food budget much below $100 per week, even leaving aside such frivolities as sport or the occasional beer or espresso coffee.

To be fair, the $20-odd per week for telecoms includes broadband internet (arguably a necessity these days), and the basic Sky TV package. With our electricity usage (both out of the house a lot), the $20 per week estimate may be a little above the average. But these things only make a couple of dollars difference in any case. The elephant in the room is the rent, which takes up 72 percent of my principal income.

You might think that the rental is high, but although it's in quite a good location, it's not luxury. I also walk everywhere and have no transport costs. From memory, the cheapest monthly bus pass is at least $100, or $25 per week. In summary, I'd make the case that a subsistence income for living in Wellington would be at least $350 per week.

Now, although it would be nice to have an income that matches my outgoings, I don't have any actual problems. I have savings from several years of well-paid work as a backup. I also have a bit of work doing tutoring and marking, which, although not well-paid for something requiring a graduate degree, is relatively stress-free and drags my overall income part of the way towards the break-even level. Studying is a personal choice, and there are a number of othe rbenefits gained through being a postgraduate student.

However, for those on a benefit or pension, working on close to minimum wage, or god forbid, having to support dependents, things must be very difficult. In some future posts, I want to reflect on the situation of people on low incomes, which I think includes some structural disadvantages that aren't always noticed.


soph said...

According to that food costing, the cost of feeding our family is more than the student allowance plus tax credits. Of course as soon as we earn anything, these disappear. Lucky we have vege garden and supportive parents

Simon Bidwell said...

Thanks for the comment Sophia. Yes, I've come to conclude that things like the student alllowance and unemployment benefit are set at below-subsistence level -- or at best at the "extreme poverty line" (basic nutritional needs) rather than the "poverty line" (basic basket of goods). Hopefully I'll ge the chance to look at this further in some other posts.

Susan said...

Structural disadvantages - include, places where people on low incomes can afford to live often have higher air pollution, noise from traffic, more fast food and alcohol outlets, and lower levels of community facilities. People may perceive they are less safe outdoors which exacerbates lack of exercise and reduces social connectedness. Low levels of income throughout life are associated with poorer housing, and less secure housing, more overcrowding, poorer physical and mental health. I work with this stuff all the time and it is all very well documented. It's one thing to have been well educated and to know that your relative poverty is either through choice, or is temporary, but it is another to be trapped in it. All this is very well documented in New Zealand. We also know that children that are born into families in low socioeconomic circumstances have poorer mental and physical health and educational outcomes, and a higher risk of offending, and that early childhood education is a critical influence in offsetting those circumstances but we take money away from early childhood education and yet have no hesitation in handing money to Warner Brothers. I;d better stop - this is turning into a rant.

Simon Bidwell said...

Thanks, those are all really interesting and pertinent points. I have also thought of some other ones from a slightly different perspective to the published studies -- for the future posts.

But with regard to all of the things you mention, the obvious question is: what do you think we should we do about it?

terence said...

Ha - I can relate. My scholarship net costs leaves me in almost exactly the same situation as you. Which is something I can tolerate (savings, wife's income etc) but I shudder to think how hard it must be for those bereft of all informal social safety nets dependent on the far-too-frugal one that's provided by the state...