A report on CNBC found that 35% of Americans earning less than $50,000 per year live paycheck to paycheck, and a 2019 survey found that 4 in 10 Americans couldn’t afford a $4000 emergency bill.
Sadly, the state of the economy doesn’t appear to be making life any easier right now. Incomes are being stretched extremely thin, putting many people who have never had financial issues before into financial difficulties.
It’s important to remember that financial difficulties can affect anyone, regardless of their income level. Even those who earn the most can find themselves facing unexpected money worries.
But there are steps you can take to improve your financial situation when times get tough. It’s not a hopeless situation.
Pay Down Debt
Whether you are struggling now or want to remove financial disasters from your near future, paying down debt is always a good place to start. It doesn’t matter what debt you have; you want to make the minimum payment towards all debts or a pre-agreed repayment plan and then put any extra towards either the smallest amount to clear it (the snowball method, where you pay off the smallest debt first and then use the freed-up payment to pay off the next smallest debt) or the highest interest account (the debt with the highest interest rate).
Then, once that bill is cleared, use the entire payment you were making towards the next lowest or highest interest debt and so on. For some people, finding where to get installment loans online can help them pay off multiple debts and be left with only one payment, making life easier for them, but this doesn’t work for everyone, and it can increase your debt. But it is a consideration if you’re looking for an easier option and you have good credit.
Emergency Funds
Or you might know them as sinking funds. Now you might be thinking, if money is so tight, where are you able to find savings? The trick here isn’t how much you save in the beginning, especially if you are prioritizing debts; it’s about getting into the habit of putting something away. Even $1 helps. From here, once you are comfortably putting money away each month and not dipping in, you can slowly increase it. Maybe, you go from $1 a week to $2. Or you jump from $5 a month to $10, find something you can easily afford to put away and start there because $1 a week is still $52 a year, which is better than $0.
Be Smart With Spending
Many people seem to have the idea that those with money worries cannot have the good things in life because they don’t have excess funds, but neglecting to treat yourself once in a while can be just as harmful. While you do need to be careful with how you spend your money, spending frivolously will not be good for your financial situation; the trick is to get clever with your spending.
Look for discounts, use coupons, and make viable swaps where you can, i.e., walking shorter distances instead of driving, turning that thermostat down slightly, or swapping the food brands you use and saving the high-end ones for occasional treats. It could be meal planning to get more for your grocery budget, or it could be thrifting instead of buying new, it’s entirely up to you, but instead of cutting out all the good stuff from your life, look at how and where you can get creative and still have the nice things you want not just need.