To help combat chronic poverty, some think tanks and economists have pitched the idea of a universal basic income (UBI), issued by the government. In the words of the 1980s band Dire Straits, UBI is essentially “money for nothing.”
Proponents suggest that if every American adult received $1,000 a month to do with whatever they please, many societal problems could be solved. People would be able to pay basic bills and put food on the table. Children could go to school well-nourished, perform better and subsequently be better able to contribute to society as adults. Crime could potentially be curbed, as might poverty-related issues affecting physical and mental health.1
What would you do with an extra $1,000 a month? Put it toward your retirement savings? Pay down student loans? Quit your job and start your own business, knowing you have safety-net income? It would certainly come in handy during retirement. If you’re starting to ponder the power of an extra $1,000 a month in your life, it may be possible to uncover this amount amidst your own finances. Call us if you’d like some help brainstorming ideas for reducing monthly expenses or creating a household budget.
The idea of universal income isn’t new. In 1971, under President Richard Nixon, a bill to create just that was passed in the U.S. House of Representatives. The proposal died after stalling in the Senate over disagreement about the income amount.2
One philanthropic organization, GiveDirectly, experimented with handing out monthly income to residents of villages in Kenya. Researchers found that the influx of cash didn’t induce people to stop working or fuel bad habits like drinking or smoking. Rather, it was used to purchase things that households needed but couldn’t otherwise afford. The study revealed that cash payouts were more useful to recipients than charitable donations of goods and services, with the added advantage of being less expensive and easier to disperse.3
In Sweden, there’s another type of monetary trend on the rise: stores are increasingly posting signs saying they don’t accept cash. Economists there project the country will become the world’s first cashless society by 2023. Interestingly, this initiative was spurred by robberies that led the unions of bank employees, bus drivers, cab drivers and others to push for cash-free payments to protect their members.4
Of course, a strictly credit-based society has its own issues. If someone steals your identity, your funds can be drained and credit score hijacked. This reality led to recent legislation in the United States that now requires the three credit reporting agencies — Equifax, Experian and TransUnion — to allow people to freeze their credit for free. Before this bill, it used to cost as much as $10 to freeze your file at each credit bureau and another $10 to unfreeze it.5
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1 Andrew Yang. New York Daily News. Sept. 2, 2018. “Money for nothing: The case for universal basic income.” http://www.nydailynews.com/opinion/ny-oped-money-for-nothing-universal-basic-income-20180830-story.html. Accessed Oct. 8, 2018.
3 Bryce Covert. The Nation. Aug. 15, 2018. “What Money Can Buy.” https://www.thenation.com/article/the-promise-of-a-universal-basic-income-and-its-limitations/. Accessed Oct. 8, 2018.
4 Knowledge@Wharton. Aug. 31, 2018. “Going Cashless: What Can We Learn from Sweden’s Experience?” http://knowledge.wharton.upenn.edu/article/going-cashless-can-learn-swedens-experience/. Accessed Oct. 8, 2018.
5 Herb Weisbaum. NBC News. Sept. 21, 2018. “Worried about data breaches? Now you can freeze your credit for free.” https://www.nbcnews.com/better/business/worried-about-data-breaches-now-you-can-freeze-your-credit-ncna911101?cid=sm_npd_nn_tw_ma. Accessed Oct. 8, 2018.
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