Disclaimer: The statements made in this post are the opinion of the author. They should not be viewed as financial advice. Please consult with a financial specialist before making any financial decisions.
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I know that this might be an unpopular topic. If you are interested in building your wealth or just supporting your family, you probably don’t like the idea of having to rely on the government for anything. I completely understand. Financial INDEPENDENCE is the goal. But let’s be honest, as a low wage earner, covering the bills each month is a challenge. Let alone setting aside money for investing or paying off debts.
With this reality in mind, I want to give some thoughts on what government assistance programs are available and how to properly use them as tools to obtain financial freedom. I think it is important to understand the assistance options that are available, but if you don’t care or you already know what options there are feel free to skip this section and continue reading at “Should I Really Use Government Assistance?”
SNAP (Supplemental Nutrition Assistance Program) gives money to families that are having trouble putting food on the table. Another common name for this is food stamps, even though it is now done on a card instead of via vouchers. If you are currently forced to work a second job just to put food on the table, then this is an ideal program. You can use it to cover your food expenses while you work on your higher paying business or use your time to get additional education that will get you a higher paying job.
A companion to SNAP is WIC (Women, Infants and Children) which gives additional food assistance to Pregnant women, and women with infants and young children. It covers the basics like bread, milk, baby food, and fruits and vegetables, etc. If you are struggling with a young family, then this program could be extremely helpful for covering your basic necessities while you grow your income.
Another expense that is quite worrisome is housing. If you have a low enough income (adjusted for family size and cost of living) then you may be able to get subsidized housing. The downside to this is that there are very strict requirements on where you can live, etc. I don’t recommend this option unless you have to. On the other hand, there are government backed loan programs that can help you get a home loan long before you save up the generally required 20% down (such as the FHA loan) which is worth looking into if you are currently renting and would like to become a home owner.
Another helpful housing program is LEAP (Low-income Energy Assistance Program). This helps people with low incomes pay for their heating and cooling bills, which can be quite high depending on where you live. This offsets the fluctuation in your utility bill which makes budgeting for utilities easier. Much like SNAP and WIC this can help you work on increasing your income without worrying about providing for basic necessities.
Medicaid is available for low income earners that can’t afford to pay for health insurance. This program completely covers a lot of different medical expenses, including childbirth! If you don’t qualify for Medicaid you might qualify for CHIPs (Children’s Health Insurance Program) which is a health insurance program for children in low income families for a nominal fee. This is a huge deal because of how expense medical insurance can be as your family grows.
Beyond these main government programs are other forms of assistance, but the last one I would like to talk about is TANF (Temporary Assistance for Needy Families). TANF is a unique program because it helps low-income families become self-sufficient. If you are trying to make that leap towards being able to provide for your family but can’t leave that second job to get schooling or to try your hand as an entrepreneur this might be a program for you. It can even provide childcare and job training in certain circumstances!
Should I Really Use Government Assistance?
In short, the answer is no—if you don’t absolutely need it. Relying on someone else for your daily living is not only dangerous for your long-term finances, it is dampening to the soul. For our family, we qualified to have my wife on Medicaid. We planned our finances around not paying for her medical insurance. Then out of the blue we received a notice saying that she no longer qualified and her benefits were being cut at the end of the month. This was hard on our finances, but the biggest problem was that she was 8 months pregnant!
With some hard work and luck, we were able to get her coverage after all, but that was a stressful time because we had given away our power to provide for ourselves. If we were able to provide coverage for ourselves we would have been in a much better position—financially and mentally.
That being said, until I increase my income sufficiently, it is difficult to cover all of our expenses on our own. We have elected to use government assistance to bridge that gap. There are two important things to remember when you make the decision to use government assistance on your financial journey.
1 You are not in control of your financial future while you are using government assistance. A new law can be made at any time that makes you ineligible for benefits. The amount of benefit given to you is up to some bureaucrat’s judgement of your situation. The government can decide what you can and cannot use those funds for—for example we were not allowed to buy whole milk, only 2% or less. Don’t give up that kind of control of your life unless you have to.
2 The purpose of using government assistance is to bridge the gap between being unable to cover your expenses and being able to live comfortably on your own. It should be viewed as a steppingstone towards better things, not an excuse to buy a bigger TV. If you are using government assistance, I would urge you to make it your goal to stop using it as soon as you can to take control of your own financial future.
Food (and Housing) For Thought
Government assistance programs are available for those that need it. These programs help low income earners cover their expenses in three huge categories: Food, Housing, and Healthcare (please notice that the food and housing are also two of the three biggest money suckers). While a low income earner can use these to help them cover expenses, you should remember that you give up control of your financial future as long as you depend on assistance programs, and it is important to get off of these assistance programs as soon as possible in order to make progress towards financial freedom because as long as you qualify for assistance it will be difficult to reach your financial goals.
What do you think about using government assistance as a tool for meeting your financial goals? Are there any other assistance programs that low income earners should know about? Tell me about it in the comments below.
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Financial Independence: (See Financial Freedom) Being able to cover all of your expenses each month without having to work. This doesn’t mean you don’t work, and it comes in a variety of ways from investing in stocks to real estate to businesses, etc. Your path to financial freedom is your own.
Government Assistance Programs: When a government organization gives money, food, or other resources to individuals and families that have low incomes, which depend on where you live, or meet other certain criteria. Examples include: Medicaid, TANF, LEAP, and SNAP, etc.
Subsidized: When a government gives funds to a group, organization, or individual to offset to the cost of something. Subsidizing can include the giving money to farmers, paying for part of health insurance premiums, etc.
Government Backed Loans: When a government organization provides assurances to a lender that if the borrower doesn’t pay the government will cover the remainder of the loan. This allows lenders to give money to people that are considered “riskier” to lend to. Examples of riskier borrowers include they have a lower down payment or they have a less than desirable credit score, etc.