Living in Poverty: What Would It Look Like?

Corey —  September 20, 2010

       Poverty has been on my mind for some time now. What is poverty? How do we measure it? How do you overcome it? How do you live in it? Each of these questions (and more) warrants a post or several posts of its own. But that last one is what I want to talk about today.

       I’ve been wondering what it would look like if my wife, Michelle, and I had to live in poverty. What would we have to give up? What would we spend our money on? What would life look like living in poverty?

Poor Family from the 1940s

Defining Poverty

       In this case, I’m going to define poverty according to the 2009 U.S. federal poverty level guidelines. For two people, the poverty level is $14,570/year. This level applies regardless of where you live in the U.S., which doesn’t make much sense to me since the cost of living varies so much by location. But perhaps the areas with a higher-than-average cost of living adjusts the poverty level guidelines for their assistance programs. That’s something I’ll have to look at in another post!

       I could use a different measure for poverty – a global measure, for instance. But the disparity between the global poverty level guidelines and the U.S. poverty level guidelines is extreme. Based on a $2/day/person poverty guideline (World Bank threshold), we’d be looking at $1,460 or 1/10 of the income for the U.S. poverty level. I can tell you right now that would mean giving up everything except food. No shelter, no transportation, no clothing purchases – absolutely nothing but food…and not much of that.

       So for this article, I’m going to use the federal guideline of $14,570/year which is pre-tax. I’m not going to include food stamps, federal/state health coverage, or tax refunds (namely, the Earned Income Credit). Some studies have shown that the poverty level income would be 30-40% higher if such benefits were included, but I’m going to stick to the $14,570 number for the sake of simplicity.

What Would Our Spending Look Like?

       If our annual income were $14,570, our monthly income would be just over $1,214. Here’s what I think our monthly budget would look like. Some of these numbers are based on actual expenses now and some are based on what I estimated after making changes to our lifestyle. I’m assuming we keep our current jobs.

Category Amount
Income $1,214.17
Giving $130.00
Saving $106.70
State & Local Taxes $39.46
Health Insurance $76.93
Rent $400.00
Renter’s Insurance $11.08
Groceries $150.00
Utilities $120.00
Auto (Gas, Maint., & Ins.) $130.00
Other (Household & Personal) $50.00
Total Expenses $1,214.17

What We’d Have to Give Up

       So the next question is how would this differ from our current lifestyle? Well, first we’d have to move. We’d have to find a place for 2/3 of the rent we’re paying now, and it would need to be closer to Michelle’s job to cut down on gasoline costs. A different place would also likely cut down on our utilities. This would be a major change since we’d have to move away from our family, friends, and church but not very far – just far enough to make it inconvenient but doable. We’d also likely be living in someone’s basement or sharing a place with another family for rent that cheap.

       We’d have to give up the excellent health insurance we have through Michelle’s work and buy a no-frills $10,000 deductible plan that doesn’t cover office visits or prescriptions. It would only cover serious catastrophes like cancer. In contrast, our current insurance has a very low deductible ($150/$300, I think?) and covers office visits and prescriptions for a low co-pay. We’d also be giving up our dental insurance, though I’m not sure that’s much of a deal anyway.

       Speaking of insurance, we’d have to decrease the coverage on our auto insurance to the state minimum levels and increase the deductible on Michelle’s car to $2,500. We’d also have to think about selling my car but that wouldn’t be completely necessary. Decreasing the coverage limits could expose us to some serious risks if we were to have an accident – likely resulting in bankruptcy if it’s a major accident.

       I don’t mind that we’d be paying less in taxes. But our giving would have to go down and that wouldn’t be so great. We’d have to make some tough choices there. All of our saving would most likely be short-term savings to cover the deductibles for our insurance policies.

       We’d have to spend less on groceries but not much less than we currently spend. I don’t imagine there would be any problems there. We’d just have to limit our meat intake and replace it with beans instead and shop a little more carefully. Eating out would be out of the question. We’d also need to cut our household and personal spending in half.

       Beyond that, we’d have no cell phones, no Internet connection, and no TV (that last one’s not any different from now, but I’m just saying). We wouldn’t be able to pay my student loans unless we gave up saving or giving (or some of both), but forbearance or an income dependent plan would be an option at that point. We’d have no money for entertainment or travel of any kind, and every dollar would need to be meticulously tracked and spent with care. As it is now, I don’t track what we spend our ATM withdrawals on completely so that would have to change.

       So while it wouldn’t be easy or “fun” to live on this budget, it would be possible. But we’d have no chance of saving anything for retirement, buying a house if we wanted to do that, or doing anything that required money outside of this budget. (That means no more sewing or jewelry making for Michelle. My hobbies don’t really require any money right now I think.)

Living Off Uncle Sam (or You, Rather)

       I didn’t include government benefits in that budget, but if I had things would have worked out quite a bit better. Between Section 8 housing, tax refunds, food stamps, health coverage from Pennsylvania, and utility assistance programs I think we could live at pretty much the same standard we currently enjoy. (Except for the housing part…that would likely be a major decline.)

       These benefits would probably comprise at least 25-40% of our budget in this scenario. At that rate, we could probably afford cell phones, an Internet connection, auto insurance at our current coverage, our normal household and personal spending, my student loans, and even some entertainment. Or we could choose to save that money, invest in ourselves (to increase our income), or give to people in more need than ourselves.

Possible But Not Enjoyable

       I’m not making light of this scenario. I’m certain it would still be stressful and emotionally draining, but it wouldn’t be impossible to live this way. (Though I’m having difficulty convincing Michelle of this. :))

       I think the reason I can say this is because Michelle and I are pretty content. We don’t have to have the latest gadgets or fashions. We are naturally frugal people who don’t enjoy spending tons of money. We have low-key hobbies, can entertain ourselves, and know how to cook. We’re also disciplined enough to say no to ourselves on the non-essentials. All these factors combine to make it easier for us to live on less than most people in America. (I don’t say this to boast but to simply point out facts. Many people get sucked into the culture and go with the flow without question. Neither Michelle nor I have ever been ones to follow the crowd.)

       I’m thankful we’re in a situation where we don’t have to make these choices. God has blessed us with all that we need and then some. But I struggled with creating a sample budget for this scenario, and I now have a slight understanding some of the choices people are forced to make when they’re living on so little. I say slight understanding because I don’t think you can truly comprehend what it’s like to live on that kind of income until you’ve done it.

Your Thoughts

       Do you think you could live at the federal poverty level? What would have to change for you? What would you have to give up? Share your thoughts in the comments below!



Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

15 responses to Living in Poverty: What Would It Look Like?

  1. Paul,very thorough post. Interesting! I’d have to think it’s possible to survive on pretty much nothing, but having any decent standard of living certainly requires much more than the poverty level. Or combining households with others….

  2. Glad you liked it, Trent! It wouldn’t be easy, but I think it’s definitely possible even at the Federal poverty level. It does leave a lot to be desired though, both from a personal standpoint and a financial planning standpoint. You might be on to something with that communal living idea! :) I’ve not heard of too many success stories with it (aside from Hutterites, I guess), but it would definitely be a great way to save money. I think with the right people (in the right mindset) it could be done successfully. That could be a good idea for a post! Thanks!!! :)

  3. There certainly are a lot of logistics to consider!

    I have not attempted to calculate what poverty lifestyle, but I did write a sample budget for a median income family with two adults and two children in my city.

    There is some wiggle room for extras in the median income bracket, but frugality still needs to be part of the picture. Some people would be surprised to realize that some expenses that are thought of “middle class lifestyle” would be difficult to work even into that budget. (Example: one car payment, not two.)

  4. I agree – to make it on a low-mid income you’re going to have to stop assuming you deserve the “middle class lifestyle” you see portrayed everywhere. Frugality is the name of the game if you want to make it here.

    The other alternative, of course, is to drown yourself in debt and always stay stressed out about money. Having an iPhone doesn’t sound very fun to me if that’s one of the possible consequences… 😉

  5. Fair enough, Paul! But I am seeing people holding onto multi-purpose gadgets and services as much as possible. Cablevision will often be dropped before Internet, for example.

  6. There’s certainly more use for the Internet than cable, and if you swing it right you can replace most of the cable shows with online options anyway.

    But my main point is that the entitlement mindset won’t work if you’re in the low-mid income levels and trying to save. Just because everyone else has something doesn’t mean you should, too!

  7. I enjoyed your article and your last comment about entitlement. The entitlement mindset has a huge effect on how people deal with their finances, for low or middle income families, and their savings plan. Good article man.

  8. Thanks, Jarrod. I’m glad you liked it. Entitlement certainly has a stranglehold on our society. I think breaking free from that mindset is the first step from consumerism to responsibility.

  9. I currently live on an income right around the poverty level. I actually would make quite a bit more, but I have been having my wages garnished for several years do to hospital bills I could not afford to pay. I clear about $15000/year after taxes and garnishments. I have a difficult time paying bills, eating healthy meals, or buying any of the “extras” like new shoes, clothing, or other non-weekly costs. Because I am single with no kids, I don’t qualify for any financial help from Uncle Sam. It’s a joke if you think you can tithe, give, or save on that little, especially if you’re talking about a family and not a single person. Your wife is right…it can’t be done. Something always suffers every month when you have to decide which bills to be late on or not pay at all.

  10. Jason, I’m sorry to hear you’re having so many difficulties. Your income is low (although it’s not at the federal poverty level for a single person). As I said in the article, I’m not making light of the situation or saying that I truly understand what it’s like to live at the poverty level. I agree with you that there are many things you’d be unable to do and you’d have to make many tough choices. However, I do think it is possible to at least “get by” on that level of income assuming that you make some serious efforts to ignore culture, live frugally, and learn skills so you can do many things yourself (rather than paying someone else). Please understand that I’m not judging you or saying you’re not trying hard enough. I’m just saying that I think it would require a completely different approach than what our society holds up as the ideal.

  11. I’ve been a single mother for 16 years. In order to live on the budget that you’ve outlined here, your vehicle would have to be paid for and you would never have money for tires or repairs. I know that you included maintenance, but you could only get away with that if nothing else tears up. Also, you would have to cut, perm, color your own hair and buy your clothes/shoes from the Goodwill. You would not have money for prescriptions or doctor’s visits. I could go on and on – been there and done that.

  12. Your Wife Is Right June 18, 2011 at 12:52 AM

    My wife,mother and I are going through the hell of poverty right now.
    I live in Pa. and you seem to gloss over a few things and make them look pretty.Please let me set a few things straight.The utility assistane you speak is 1 time a year.Liheap is its name.2 Pa in 2004 by pressure from the utility companies un did the law preventing electric shut off to the elerday.Cant pay no electric no electric heat.Granny freezes.3.There is a 2 year waiting list for medicade in this stamps oh excuse me SNAP= a dollar a day per person.Im not disbelieving you “tried this out”.How ever some of te info is flawed and in accurate.Please update this.We are not in a rosey picture due to illness that decimated our financial situation for some time to come.My wife works.I have a business and not deadbeats that flood the system and work it.Im not hate ful or un kind.

  13. I did not say we “tried this out”. I admitted within the post that it was merely a thought experiment and a weak one at that. I admitted that I have not had to live in poverty and that thinking about it is nothing like the real thing. I admitted that I may not have the full picture. I admitted that it would not be easy by any stretch of the imagination.

    Please do not get hostile with me for trying to empathize with people living in poverty, however flawed my attempt might be. I’m truly sorry for the struggles you’re going through now. I wrote this post in an effort to figure out what it might be like to live at the poverty level – not to say that it’s easy and people shouldn’t complain.

    Also, please read my comment rules (just above the comment box) and use your real name or initials the next time you comment.

  14. Justin Jacoby July 24, 2014 at 2:14 PM

    I realize that it’s now 2014 so the numbers prolly don’t match up, but where I live in Iowa I can’t imagine getting an apartment for 400 a month that doesn’t include the luxuries of possible death by freezing in the winter, frozen pipes, broken windows, death by heatstroke in the summer, a two minute walk to the nearest drug dealer and a neighborhood that would be more aptly named Getshotville. The HUD apartment I’m presently in is rated at $900 a month. If it wasn’t for the HUD I’d be paying $10,800 a month on rent alone.The 2013 poverty level for Iowa is $11,490. This leaves me with $57 per month to spend on food, gas, car insurance, phone bill, clothing, cat food, and what ever else I need. Obviously, unless I can cover most of that with a five finger discount, none of that is actually going to happen. Oh, and I make a good bit less than $11,490 a year so………..I wonder if you can develop a mutant healing factor if you get shot enuf?

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    […] Living in Poverty: What Would It Look Like? A real life attempt to do a budget living on a poverty level income.  Very thought provoking. […]