Bulk Up Your Financial Health as a Low Income Earner
With these statistics, it’s no wonder the majority of people living paycheck to paycheck are under the impression that “successful money management” or “financial health” are notions reserved for people who have disposable income.
The reality is that anyone can apply healthy financial tactics to help get a better handle on their finances or improve their financial situation even with a limited income.
Start by creating a budget. Budgets are a great first step in outlining every dollar that comes in or out of your account. This clarity can help you understand how and when you spend money, and whether or not you can make better purchasing decisions.
Next, spend the time gathering information on all of your debt. While debt payoff may be a long way off, understanding how much is owed, payment dates, monthly and annual interest rates, and payment minimums will help you organize and ensure you won’t miss any payments. You could even create a payment calendar to help track spending appropriately.
Lastly, set financial goals. It may seem counterintuitive to set monetary goals for people who have little to no disposable income; however, this is a crucial step in becoming financially stable. Small goals could include saving a few hundred dollars to secure a savings cushion or emergency fund, pay off your smallest credit card or put new tires on your car. Achieving a goal, no matter how small, can be incredibly empowering and motivating.
If larger goals seem too lofty or overwhelming, break them into smaller more easily achievable goals. For example, consider adding automatic transfers of small dollar amounts to your saving account. Adding this to your budget early on will help in saving for the future.
It is important to realize what “financial health” means to you, your family, and your current situation. It will look different from everyone, so make your financial decisions based on your needs.
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