Would Basic Income Help You Get Out of Debt?

Basic income is when a government or private organization gives a monthly cash allowance to beneficiaries with no restrictions on how the beneficiaries spend the money. Many cities in the United States have conducted basic income programs of limited duration to study the effects of these programs, such as the financial stability, physical health, and emotional wellbeing of the beneficiaries and effects on the local economy, including but not limited to the unemployment rate. Basic income programs usually have eligibility criteria, such as household income below a certain level. Philadelphia is currently running several such basic income programs for low-income households. By contrast, universal basic income is when every person in an entire country receives an equal monthly allowance, regardless of each person’s financial situation. Universal basic income was a major campaign issue in Andrew Yang’s presidential campaign in 2020, but the United States has never implemented Universal Basic Income on a national scale. A recent article on Business Insider describes how the beneficiaries of basic income programs in 26 have used the money. For help brainstorming about getting more wiggle room in your budget, whether through debt settlement or a debt consolidation loan, and how to use it for maximum debt relief, contact a Philadelphia debt relief lawyer.

Why Are We Talking About Basic Income Now?

Basic income programs have existed for decades, but they became a major matter of public discourse in 2020, when many businesses closed temporarily because of the COVID-19 pandemic; the federal government partnered with banks to implement the Paycheck Protection Program (PPP), so that businesses to borrow money to continue paying their employees even while the business was not operational. Even though many businesses have reopened since the pandemic, and the youngest workers employed today have never known a time when small business owners lived in fear of another pandemic shutdown, the financial stress of the pandemic days continues. Prices have remained high, but wages have not risen to match them, and the job market remains precarious. Proponents of basic income believe that it would protect society against financial instability and the social instability that comes with it.

Spending Habits of Basic Income Recipients

According to the Business Insider article, most basic income recipients remained steadily employed while receiving basic income; their employment income increased rather than decreasing. They tended to spend the money on medical bills, credit card debt, groceries, and childcare. They tended not to spend it on debts that were already in collections. This only shows that basic income recipients prioritize keeping new debts out of collections, rather than resolving debts from years ago. In most programs, the monthly allowance was between $500 and $1,500, not enough to equal the monthly income from a full-time job that pays minimum wage. In Philadelphia, the biggest reason cited by people who were eligible to receive basic income but chose not to was that they did not want to jeopardize their eligibility for government benefits such as SNAP and Medicaid.

Contact CONSUMERLAWPA.com About Giving Your Finances a Boost in 2026

A Philadelphia consumer law attorney can help you if a little bit more money in your budget would go a long way.  Contact CONSUMERLAWPA.com to set up a free, confidential consultation.

Source:

businessinsider.com/basic-income-pilot-programs-us-takeaways-2025-12#the-cash-payments-didnt-discourage-recipients-from-working-1