The Financial Diaries of Low- and Moderate-Income Families

Although they sometimes pay bills late because money is tight or because the family’s divided attention makes it difficult to stay on top of due dates, Clara is also strategic about when and how she pays for different services. She knows that the mortgage is due on the first of the month, but that she has until the 18th to pay it without incurring a penalty. If she needs to pay the electric bill late, she knows that if she brings her payment directly to the electric company, no late fee will be assessed. She has some leeway on how and when she pays off a credit balance of about $500 at a furniture store, because she knows the owner of the store. The family sometimes faces sudden and unexpected expenditures, however, such as a $200 traffic ticket in July. That month, Clara also postponed visiting a doctor for an upper respiratory infection for a week because she had no medical insurance or funds on hand at the time.

I listened to an episode of Planet Money last night and discovered the U.S. Financial Diaries project, which is tracking more than 200 low- and moderate-income households over the course of the year and collecting highly specific details about the financial activity that occurs in the homes.

I went on to read the story of Tim and Clara Adrian, a couple in their early 30’s who live in Mississippi and rely on erratic sources of income. Clara works part-time at a preschool and earns about $500 a month, and she receives additional money for babysitting. Tim works full-time and earns $1,200 a month. The couple also take care of foster children, from which they earn about $1,400 a month, but have also received less than $500 during certain months. Without the foster care income, their household expenses would exceed their take-home pay, so the third income source is a necessity — even if it fluctuates every month. The project is terrific — it’s “how other people do money” but done by researchers and with smart charts.

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