Americans Disposable Income Increases

(KNSI) – A new study by the University of California at Berkley finds disposable income for Americans went up more than 5% between December 2019 and December 2021. The study says the lowest-earning Americans saw the biggest benefit, with increases of 11%.

According to economists, disposable income is considered the amount of money left over after paying taxes.

Tina Anim, Program Manager and Community Lead at the Villiage Financial Service Center says she has seen more central Minnesota families having some extra cash in their wallets as of late, adding, “typically, we are dealing with low to middle-income families. What we noticed is that, due to the pandemic stimulus and all of that, we had clients that looked like they had some extra money. What we usually advise is if you’ve come across extra money that you don’t need right away, set up an emergency fund to meet any unforeseen circumstance.”

Anim suggests a family have enough money on hand to cover six months of expenses and use any extra money to pay down credit card balances. “There’s two ways typically to go about that. You could start by paying off cards that have the lowest balances. Or you could look at paying down the card that has the highest interest rate. So set aside an emergency fund, and if you have that covered, if you have any outstanding debts that you’re paying interest on, especially credit card bills, pay towards that.”

While Anim recommends getting a budget together, she is quick to remind families, “As you’re working towards improving your personal financial situation, realize that it takes time. Most of the habits with money we develop over a lifetime. So it takes time, trial and error, and working over and over again. Just keep at it and fine-tune it to suit you.”

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