How to set up an emergency savings if you have a single income, low-income, or changing income. It’s possible.
Expect the Unexpected
The struggle is real. Nearly half of all Americans don’t have enough cash on hand to cover a $400 unexpected expense without selling something, borrowing from friends or family, or going into some form of debt. Most Americans, aren’t prepared for the unexpected. An emergency fund is part of a healthy budget that helps ease the blow of surprise events. We all know life happens — it’s just best to prepare for it.
When cash is tight, any expense may feel unexpected. As bills pile up, so do the problems, and while an emergency fund sounds great, it may feel impossible to build extra cash with debt, low wages, and when money is needed as soon as possible. The problem seems even worse for those on hourly, or on a non-regular wage schedule. 75% of hourly workers have less than $500 saved. 30% of all Americans deal with variable income from month-to-month. The shocking part is, even earners with incomes over $150,000 are also living to paycheck to paycheck. At all income levels, Americans are struggling to put money away.
Although it may sound or even feel impossible, paying off debt and starting a saving fund is possible for anyone— even those with a single income, low income, or inconsistent/variable income. This does apply to those with families too, it just requires a group effort. Here are some steps to helps you break free from the cycle.
Pull the plugs
The first thing to do is to know where you are financially. Then, it’s time to start pulling the plug. Once you know what your essentials are — food, rent, utilities, etc. It’s time to get rid of the “non-essential” expenses. Subscription accounts to music, streaming television, and food are costly — getting rid of them can save money. On average, Americas spend nearly $250 a month on subscription services. If the average American pulled the plug on subscription services for a year, that alone could save nearly $3,000.
While you may feel attached to some of your current services, it’s best to get rid of them, or try downgrading and using the free version. Listening to a few advertisements isn’t too bad if you are saving yourself a few extra dollars each month. Another creative way to scale back is to join forces with friends for services. While it may not save as much money as getting rid of the service entirely, splitting the cost among 3 or 4 people can serve as a great way to save money as you still get some enjoyment.
Don’t do it for the ‘Gram
Social media has also contributed to a lack of financial preparedness, particularly among Millennials. Nearly 60% of Millennials spontaneously made a purchase after being influenced by social media. It’s important to remember that social media may not be representative of what is going on in that person’s life. If nearly half of America can’t cover a $400 bill, there is a good chance the person you are looking at on the screen may be one of them.
Kawhi Leonard, the star of the NBA Champion Toronto Raptors is famously known for driving a 1997 Chevy Tahoe as his primary vehicle before signing a $94 million contract with the Raptors. There is a list of athletes who aren’t going out living lavish lifestyles, but are being budget conscience despite having more financial freedom than most. So if someone who makes multimillions a year can work side hustles, listen to free versions of music, drive old cars, and live at home with their parents — why can’t you?
Boost your income
This may be the most challenging depending on your situation, but it can also be the most impactful, especially if you follow and combine it with the two steps above. Picking up a side hustle, second job, or finding some form of supplemental income can have real impact on cutting debt and increasing savings. The average side-hustle earned nearly $13,000 in additional income. That’s nearly twice as much as the average amount of credit card debt owed.
While this may not fit every one’s lifestyle, most people who reported having a side-hustle reported working 11 hours a week. Make you side-hustle fit your schedule by finding something that works for you. If you are already in your car a lot, try ridesharing or food delivery apps. If you have pets, look into dog-walking or pet sleepover services. If you have children, maybe babysitting, tutoring, or party planning may work for you. At the end of the day, try to find something that fits your schedule and your lifestyle.
Do it for YOU!
Doing what is right may not be easy, but it is worth it. In the end, living paycheck to paycheck is stressful and making some temporary or even permanent sacrifices can help free your mind and give you some extra breathing room. Taking into consideration the suggestions above could save you $15,000 or more. Imagine having that extra cash in the bank account or put towards a bill.
Take a break from being caught up on the latest shows, “flexing” on social media, and starting doing what is best for YOU.
Focus on long-term benefits rather than short-term happiness.