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Don’t Take Budgeting Advice From McDonald’s

This article was written by in Featured, Financial Literacy. 23 comments.

I had planned to write about McDonald’s ridiculous budgeting tips for employees when I first saw the news circulating through social media. I’m so far behind with my editorial plan that every last Consumerism Commentary reader has probably heard about this latest manifestation of corporate ignorance of reality by now. Writers of all stripes and social persuasions have already shared their two cents.

It’s almost not fair. Almost. I wrote about this same company recently because of one franchise’s desire to force the employees to receive pay via fee-riddled debit cards. McDonald’s is a significant employer in the United States, and let’s face it, the minimum-wage and close-to-minim-wage jobs in the fast food industry are opportunities for unskilled workers to eke out a living. This is an economic necessity. And the fact that a corporation is trying to instill financial values in its employees, albeit in a method that has no chance for success, can be lauded, I suppose.

McDonald’s efforts go beyond this budget. With the “help” of VISA Inc., McDonald’s has released an entire, bilingual fifteen-page PDF and accompanying website, the main marketing feature of which is, no surprise, the same VISA “pay card” that some employees will be required to use to receive their minimum-wage pay. Beyond the marketing, the website and PDF carry the typical personal finance advice: thinking about and setting goals, tracking spending and income, and designing a budget. Beyond arithmetic and understanding the social conventions of money for transactional purposes, these are the basic building blocks of financial literacy and the first steps towards building financial independence.

The program won’t be effective for the same reasons financial literacy programs, particularly those designed and funded by the financial industry, fail. That’s not to say the overall advice is incorrect or poorly presented. Lessons like these — not to mention articles on personal finance blogs — are not designed the same way those who most need the information would need to experience those lessons. If designers, writers, and advisers are looking to improve the potential for financial independence among the neediest, a group that includes families living in or near poverty, the financial literacy programs need to be designed to take advantage of how people actually learn and internalize behaviors and to address the realities of a hierarchy of needs.

I’ll get to more on the inefficacy of financial literacy in a future article. Hint: at the World Domination Summit I found myself accidentally announcing my next project. It deals directly with this problem, and now that I’ve announced my intentions, people seem to want to hold me accountable for moving forward. I’m fine with that.

Until actual evidence regarding behavioral cognition is addressed, it makes sense to evaluate programs that approach the problem, including the example budget from McDonald’s. The corporation has already responded to criticism by saying this budget was only intended as a sample, not a suggestion, description, or prescription. I don’t think that’s a good enough excuse. The budget signifies a misunderstanding of how people survive financially in poverty.

I’ve been much better over the last few years about eliminating fast food from my diet. But as I was driving back home from upstate New York a few nights ago, not having packed snacks for the road, I found myself growing hungry with about two hours remaining on the drive. I did what was convenient: I stopped at a rest stop fairly late at night and visited the only counter open: McDonald’s.

This isn’t the only time in my life I’ve opted for McDonald’s food. And I’ve noticed something in my indulgent visits over the years: The products are designed to function more like candy than food in terms of the emotional and chemical response to the dining experience, with the comparatively small burgers, the two-bite-sized chicken nuggets, the sugar, the salt. But I’ve also noticed, although I may be wrong, that most McDonald’s employees do not come from households living in poverty. The typical employee seems to be a young teenager with his first job, part-time, learning to work hard, but perhaps that observation is more a result of the neighborhoods I’ve been in. But in his or her family, at least one parents earns the bulk of the family’s income, and this fast food job is more about teaching responsibility and work-ethic than putting food on the table.

I’ve never worked in the fast food industry, but it looks like it can be frustrating, stressful, thankless, tedious, and manually laborious. Actually, it sounds like many other typically underpaid jobs, from non-profit work to the education industry, but it probably has the most in common with factory work of previous generations.

To return to the budget used an example in this VISA pay card advertisement with tips about financial literacy, the company could have provided a better example. But if most employees are students learning on-the-job responsibility rather than uneducated, unskilled laborers trying to feed a family, does it really matter? The problem is that by virtue of the need for this financial literacy endeavor, McDonald’s is assuming its employees are working there for primary household income. If the company is going to make that assumption, they ought to do it right for the benefit of that particular audience.

Here’s the original budget offered by McDonald’s, before the company responded to criticism and ineffectively shifted some numbers around.

  • It take guts to tell your employees they need a second job, and with that, still won’t be able to afford to heat their home.
  • $20 a month for health insurance is impossible. Working two part-time jobs, neither will likely offer employer-subsidized (or even employer-available) health insurance. Individual insurance costs at least $400 a month (in New Jersey — other states might have less expensive plans). There are two situations that are likely: kids working at McDonald’s still living with their parents can be covered under their parents’ insurance, so the expense is minimal, or someone in poverty will simply choose not to buy health insurance.
  • $600 for a mortgage or rent may be a good estimate in some areas of the country. I know it wouldn’t be sufficient in New York or New Jersey unless sharing an apartment with a group of people — which I did when I worked for a non-profit, getting my rent down to $350 per month. That particular living solution was unsustainable for the long-term, and I can only imagine how worse it could have been.
  • Child care and education have no place in this budget unless they fall under the “Other” category.
  • I suppose one of the biggest expenses for a family, food, is to be taken out of the “Monthly Spending Money.”

The title of this article states what should be obvious. What may not be obvious is the idea that companies that sell financial products, and in this case that class of companies is represented by VISA, are not the best distributors of basic financial knowledge. VISA is including this effort in its promotion for the company’s pay cards, the feature rolling out to McDonald’s franchises throughout the country. It’s questionable whether this system is a good replacement for paper checks, but only questionable if the employees don’t have bank accounts and must pay a fee to a check-cashing service each time they get paid, and not a good replacement for direct deposit if the employee qualifies for a free checking account.

Some McDonald’s employees, and many other households throughout the country, may have a difficult time finding a checking account that is free, and that’s a situation that must be improved within the industry before any bank or financial company can legitimately try to enter the most neediest communities with an intent to “teach positive financial behavior.”

I would say let’s just ignore McDonald’s attempts at educating its employees through good-intentioned lessons, but the company employees 1,800,000 according to their own marketing. That’s almost the entire population of Houston, Texas and a fairly big audience. Most will likely ignore the information, for better or worse.

What has been your reaction to the McDonald’s budget? Is this workable? Is it important that an example used in a financial literacy guide reflects a generalized reality?

Published or updated July 19, 2013.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 23 comments… read them below or add one }

avatar 1 Anonymous

McD’s commented on your concerns.

You make the failed assumption that the second job is only for the employee. The second job is for the OTHER person in the household, if one exists.

Health insurance was a typo…it is health expenses…as in co-pays. The health insurance premium is pre-tax, and the income shown is calculated after-tax. So the health insurance, along with any taxes and retirement, is already deducted from the income calculation.

It is a simple budget, but it in not far off of reality. They cover the bases. And they are trying to help their employees, who are all types, with basic money skills. It’s more than most companies do.

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avatar 2 Luke Landes

Typo aside, for a health insurance premium to be calculated pre-tax, it assumes that someone in the family has health insurance through an employer. I’m not sure that’s an assumption we can make based on the income, with annual “salaries” of $13,260 (net) and $11,460 (net).

From 2010 about McDonald’s health insurance plans:

The most affordable plan at McDonald’s charges hourly workers about $14 a week, which comes to $727.48 annually. In return, they get $2,000 worth of coverage per year. If they step on a nail or come down with the flu, they might be covered, but the costs paid by the insurer may not even equal their premiums. If they are diagnosed with cancer, or even appendicitis, they are as vulnerable as someone with no insurance at all.

The “best” plan of the bunch costs $1,680 a year and caps benefits at $10,000. But for outpatient treatment (which often means the emergency room), benefits are capped at $2,000. A trip to the emergency room can zoom past that level in a matter of minutes.

We can haggle about the details, but the budget illustrates a few things: it’s difficult to live on two minimum-wage or low-wage jobs with just two people, it would be nearly impossible to support a family with children, and if this family happens to live in an expensive location, there’s hardly any way to avoid eventual financial disaster other than getting out of the minimum-wage-type jobs. Financial literacy through a marketing effort by McDonald’s and VISA will do nothing to solve systemic problems, even if it does succeed in getting employees to care about budgeting (which is highly unlikely anyway).

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avatar 3 Anonymous

From the creator of the budget…

“In a telephone call and series of emails with CNBC, Alice Wood, founder of Wealth Watchers® International, explained how the numbers for the McDonald’s guide were developed.

“In one of our generic budgeting samples that was created in 2008 we used actual information that was gathered from interviews with a number of minimum wage employees. The line used for income from a second job can mean the person was working two jobs, or there may have been another person in the household bringing in a second income. The figures used were after all withholdings including taxes and health insurance premiums. I don’t recall the number of hours the person worked but it was based on the actual minimum wage in 2008. Heat was included in the rent for more than one of the people interviewed so it wasn’t included as a line item in the budget. The health insurance expense should have actually said ‘health care expenses’ and that figure was based on a co-payment for a doctor’s visit,” she wrote in an email to CNBC.

“The budgeting sample shows two incomes but it doesn’t necessarily mean that someone is working two jobs. It could also mean that another person is contributing to the family income,” she elaborated in another email. “The income is after all withholding including health insurance premiums. Some companies cover more than others so it’s a little hard to be completely accurate in this regard as far as what part of the premium is covered by the employer and what part of the premium is covered by the employee. It could be that some employees actually have no health insurance coverage so they don’t have any expense for health insurance … but they could definitely have health care expenses. There just isn’t a one-size fits all budget for minimum wage employees … or any employee for that matter. That’s why we leave a blank page for people to use that will fit their individual circumstances. Everyone can benefit from having a handle on their finances and that includes knowing what’s coming in and what’s going out.”

I agree that it is difficult to live or raise a family on minimum wage, whether one or two. And I also agree that it won’t solve systemic problems.

But that is not McD’s job or problem. It is not their concern whether what they pay you is enough for you. That is the employees concern. McD’s concern is to run a business.

The tone of the post somehow points the finger at McD’s for paying low wages and for providing crappy and misleading advice on what to do with that money. I simply pointed out that McD’s doesn’t have to do that, so something is better than nothing and at least they are trying to help with some amount of literacy. And if they don’t pay enough, then don’t work there. If minimum wage doesn’t crack someones nut, then go somewhere else and get paid more if you are worth it.

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avatar 4 Anonymous

I don’t see a problem in providing this information to employees. It doesn’t matter that Visa is sponsoring it either. It is information and it won’t help everyone. After 30 years in the business world, I became a teacher. I even taught personal finance. You cannot get through to everyone. In fact, you will only be able to help the ones who are motivated to do something. It is very unlike my prior careers where I was successful about 95% of the time. The percentage is much lower in education. I am trilled if I can have a 85% (average) pass rate for my classes which is “C” or better. I commend McDonald’s for doing this although many may condemn them.

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avatar 5 Anonymous

I don’t think the problem was McDonald’s trying to share how to budget — I think the problem is it’s VERY difficult for someone to make ends meet at such a low wage. You pretty much have to have help, and no debt.

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avatar 6 Anonymous

Minimum wage jobs often leave the employee in the position of qualifying for welfare in addition to their regular pay. So the government is effectively subsidizing these businesses. Our taxes subsidize minimum wage paying employers, and we pay that whether we patronize those businesses or not. Whether that is the best solution or not is open to debate. You could say it helps keep prices down for those that need that. And the workers are eligible for welfare to help pay their expenses. Then again, you could say our taxes are helping the business’s profits to be higher.

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avatar 7 Anonymous


Chris Rock said it best. Minimum wage means… “If I could pay you less, I would. But it is illegal.”

Time to get real. There’s no way someone can live on the minimum wage. It needs to change.

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avatar 8 Anonymous

completely disagree.

Minimum wage doesn’t need to change. You (the employee) do.

Minimum wage applies to all workers, including part time high school and college kids.

If Minimum wage was increased to cover full living expenses, these part timers wouldn’t have a job.

If you need enough to earn a living, then get a job that pays, or the skill to earn MORE than minimum wage. IF all you can earn is minimum wage, then the problem is you, not the law.

Quit relying on the gov’t to mandate you make more. Do it on your own.

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avatar 9 Anonymous

If the government didn’t step in and provide guidelines and minimum requirements, we would have child labor, rampant discrimination against minorities and women, and people making half of what they do now. But sure, it’s our mistake to ask that the minimum wage keep up with inflation.

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avatar 10 Anonymous

In a society, and in the context of business, the relationship has more than one person. I find it hard to believe that the problem is with the employee when the company has rising profits and productivity. How is it that the cost of things can go up, but there’s no reason to raise the minimum wage, but yet, if we argue for a rise in the wage, the standard complaint is higher costs – the higher costs happen anyway, the whole thing is a gigantic sham in an effort not to pay people.

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avatar 11 Luke Landes

It might be worthwhile for those who think this McDonald’s budget has any basis in reality to read this interview with one McDonald’s employee. Sure, one employee doesn’t necessarily represent all, but it’s eye opening to the experience of living on minimum wage.

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avatar 12 Anonymous

Also see “Nickel and Dimed” by Barbara Ehrenreich. She took on minimum wage jobs in different parts of the US and wrote how she survived on those wages. She was a waitress, a hotel room cleaner, and worked at Walmart in the women’s clothing section. I like this little book for bringing it down to the nitty-gritty of what it’s really like. She has a college education, but it was still really difficult for her. Highly recommended if you want your eyes opened.

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avatar 13 Anonymous

I bought this book for my wife as a gift, and we both ended up reading it. It was very, very compelling. I always respected what hard physical labor was really worth, but this book really helped open my eyes to the daily grind that it entails and made us both feel very fortunate.

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avatar 14 Anonymous

Perspective on how you look at what McDonalds is trying to accomplish. If you look at the fact that they are trying to educate their employees, it is a good thing, however in my opinion, a Job shouldn’t have to teach you about managing your money. A minimum wage job should not be expected to support a 4 member family and should not be expected to pay a living wage. Granted the young lady is trying to do good/better, however she has dug a whole and it is going to be tough to dig out of it if she doesn’t find a better paying job and consistently working more hours. The other option would be to learn to live/share a house with someone to decrease the costs and consistently pay bills on time.

You can’t expect part time jobs/positions to sustain a full time life!

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avatar 15 Donna Freedman

Trying to live on $15,000 a year or so (assuming you get 40-hour workweeks, which may not happen) is pretty tough unless you live in a low cost-of-living area, own your home or can live nearly rent-free, grow most of your own food and don’t have kids.
When I did “Surviving (and thriving) on $12,000 a year” for MSN Money, I was getting free rent for managing an apartment building. More to the point, those were 2007 dollars. Everything’s more expensive now.
I don’t know the answer, but what we have right now is not working.

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avatar 16 Anonymous

This is a free country.

People can start a business, blog, become a doctor or lawyer, work for the government, or thousands of other options for financial independence and success. OR they can choose to try and life on $12K per year with the surprising revelation that it is difficult. No kidding.

There all all types of avenues for prosperity. Every day.

It seems to work just fine for those willing to make smart choices and sacrifice throughout their lives, regardless of your upbringing or where you came from.

This is a perfect example, one that I teach my children, of how choices have consequences, some of which may affect you for the rest of your life.

We have people that make poor choices, then wake up one day after 10 years of making poor choices and decide they want out. Good. But you still have to pay the consequences for the past 10 years, whether you like it or not.

What we have right now works perfectly for those that understand and get it. Especially those that get it at the beginning. Life is about making good choices all throughout it, not just a certain points.

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avatar 17 Anonymous

Yeah, but it’s also about not punishing folks for something you never told them.
It’s easy to be captain hindsight and say “those people should have made better choices” but you don’t really know how they got to where they are now, let alone if they knew that choice was even possible.
There may be “all types of avenues for prosperity. Every day.” but you have to have the free time to find them.

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avatar 18 Anonymous

Interesting article. I saw the sample budget but I did not think about it in the context that you presented in this article. It is apparent that a family of four cannot survive on this budget, but it is the reality of many households. Since about 1/3 of Americans operate on a budget, including higher income households, it is a commendable effort for McDonald’s to provide financial literacy to their workforce. The question remains if they should have publicized it.

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avatar 19 Anonymous

I’m really struck by Troy’s comments on here.

Here’s my thinking, and of course this is just one person’s opinion, and I seriously don’t mean to offend or hurt people’s feelings, but, look: Some people are stupid. “Average” intelligence means there are quite a few people below that in terms of intelligence. However you want to count it–IQ scores, grades, degrees, whatever. Some people in this country are not intelligent. Now there are all sorts of levels of intelligence, booksmarts and street-smarts and whatever. But what Troy seems to be advocating–“become a doctor!” doesn’t seem realistic for most people, because they simply aren’t intelligent enough.

I would think that to start your own business or learn complicated new skills, like electricity, or programming, you would need to have a fairly high level of intelligence. If you wanted to be a lawyer or doctor, you probably need some extra schooling, and it would be difficult. Maybe I’m wrong. Maybe you can just have average intelligence and become a neurosurgeon (I kind of hope not). But you still have people below that “average” benchmark. (Also I don’t think becoming a government employee is such a good idea. After all, it seems there are many politicians railing against “big government” and saying that the government shouldn’t hire people. So, you might not want to go that route.)

But luckily, there used to be a solution in the US for this problem. It used to be in this country, the people with low intelligence–low booksmarts, I mean–could go into the labor force. Manufacturing was huge. Textiles, automobiles, furniture, housing. I used to live in Martinsville, VA, which at one point was the sweatshirt capital of the world. Textile and furniture were huge in that area. The people worked hard. They weren’t brilliant, they were average intelligence, or lower, judging by the people I met while I was living there. But they could go to DuPont and Stanley and get a job putting together furniture or working a weave or driving trucks. And they could live on it. And live well!

I lived in Martinsville for three years, from 2008-2011, and those factories were long gone. But I met many people who used to work at them. And frankly, they weren’t very booksmart. They didn’t read well, their math skills were awful. But back in the ’80s and early ’90s, they would make $20 an hour with health insurance and a pension, building furniture. They were craftsmen, and they were proud, and the company took care of them. It wasn’t work that would rack your brains. I would think anyone could learn to sand down a bedframe, while not everyone could learn to dissect a tumor from a spinal cord. But they were proud, and they worked very hard. And their company took care of them. It gave them pensions. It held picnics. It actually built quite a bit of the housing in Martinsville. In return, the people dedicated their lives to the company, and produced high quality items, not the plastic junk we get from Ikea and China. Real furniture that would last forever, and was beautiful.

Now, unfortunately, for various reasons those jobs are gone. We shipped them overseas so we could pay 8 year olds a penny a week to do the same work. But we still have those less-than-average-intelligence people here in the US. And they still want to work. And when I read comments like Troy’s, basically what I’m hearing is, “Screw you! Go to school! Why don’t you just start a business! You don’t deserve a living wage, get a better job!” And I think that’s wrong, and I think it hurts our society and our economy at every level.

Does that mean that McDonald’s should pay $20 an hour? No. But I think if we’re going to get rid of all those hands-on labor jobs, we have to find a solution for the type of people who would fill those jobs. Maybe the service sector is the way to go. But if it is, you have go to create a living wage, if only for America’s economy to keep churning. What is the US economy based on? Its citizens will keep buying crap. Uh-oh, we don’t pay our citizens any money, therefore they cannot afford to buy crap. And problems arise.

This is all an oversimplification, but I’m asking people to think about this. Seriously. Troy, you can tell others to start a business or go back to school, but some people–maybe most people–just aren’t smart enough. And instead of saying, “Well I guess you’ll starve to death,” maybe you should say, “We need to find a way to put these people to work, to teach them something and get them contributing to our economy.” Or things are just going to get worse.

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avatar 20 Luke Landes

Intelligence isn’t the only barrier. Society creates barriers of opportunity. It’s easy to say that this is a free country, everyone is born with equal opportunity, and if you want something better for yourself, you just have to go out and do it yourself. There are social barriers. Someone growing up in poverty *can* find a way to break through the generational and societal forces that put pressure towards a continuation of the cycle, but the chances of that happening are low. In a family that does not put a priority on education — maybe they’re focused on basic needs like food and shelter without time or energy for “extra” priorities like education — there’s little chance of a child giving much through to education. They help out with the household bills, they get a job as soon as they can, and sometimes they drop out of school — simply because feeding the family is more important.

Telling someone in this situation to study to become a doctor might as well be like telling a hamster to develop space travel. Intelligence plays a role in creating barriers, but it’s possible to get around intelligence barriers. (I know people who have no business being in management positions based on their level of intelligence, for example.) But societal barriers are much harder to break through.

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avatar 21 Anonymous

Excellent point. I didn’t mean to imply that intelligence is the only barrier (that’s a great word for it), but rereading my comment, I can see how it comes across that way.

There are many societal barriers of all stripes–race, sex, socioeconomic factors, health, and country of origin for our many immigrants (and not so recent immigrants–children of immigrants, and grandchildren of immigrants as well. There isn’t a level playing field in the slightest. There are many deep-rooted problems in our society that can hinder people from advancing. You can boast all you want about this being a free country full of opportunity–which it is, if you’re a middle-class white Christian male. Everyone else is SOL.

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avatar 22 Anonymous

Karen and Luke:

You make good points. There are barriers, bot intellectually and societal. And financial and geographical.

Karen…I am not saying “screw you”. The system is. The situation is. The way the system works, some benefit more than others and some don’t at all. If a system came about that removed all the barriers, especially societal, then the system would cease to exist. Not everyone can be rich, because then no one would.

And the workforce has changed. Companies no longer take care of you with lifetime pensions and employment like they did 30-50 years ago. You have to take care of yourself. That is just the way it is now. But there are still opportunities for people, whether it be labor, or trades or whatever

People need to re-examine their place in the system, and then do something about it if they want change.

I have absolutely no idea what the answer is to help those who can’t help themselves. It’s a problem that has existed for millenniums. It will never go away.

Minimum wage exists for a specific reason, and it will never be a living wage, because that is not it’s design. My point was, if you need a living wage, then you have no other choice but to figure out an alternative, or you will suffer, whether I or you or anyone else wants you to or not.

Again, as I tell my kids, when something happens, you can wish, or complain, or hope, or you can do something about it. Doing something about it, whatever that may be, is my suggestion.

Mow yards. Fix cars. Sand wood. Carpentry. Concrete. Run a backhoe. There are all kinds of people I know who do labor that run their own business, and succeed. I never said anything about intelligence being the only way. You only took that from my suggestions of which there were many others. Your looking for a reason to invalidate my suggestion. So you pick doctor and Luke runs with it.

Farming is running a business. So is Child Daycare. or cleaning houses. or driving a truck. .

Think about the last 50 places you have spent money. Likely many of them are run by a small business owner. Not a brain surgeon. A restaurant. A dry cleaner. A Gas station. A Deli. They take a chance, take a risk, try to make their lives better. And you suggest they had just a better leadoff than you.

Tell that to the next long haul trucker you see. Or the next builder or contractor you see putting up a roof, or pouring concrete, or the next guy mowing yards or plowing snow.

I’m not saying everyone needs to be self employed, or that everyone needs to go to school. I am saying that everyone has choices, regardless of where they came from, what their race is, or their background. Whether they take advantage of those choice is up to them.

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avatar 23 Anonymous

Health Insurance is what stands out for me.

I wonder if it is presumed that at this income level you qualify for some sort of governmental assistance, like Medicaid?

But if nothing else, introducing the concept of a budget is a step in the right direction for many people who may not have ever considered adopting one.

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