Living paycheck to paycheck is the reality of many Americans, yet what is the reason
that many live paycheck to paycheck?
It is the low income.
The average monthly salary, according to Worlddata, is $5780, but we all know that there are many
who can only dream of this income and are far from earning it.
So we should ask ourselves how it is possible to live on a low income while all the products
around us are getting more expensive and inflation is making our money worth less and less.
For this purpose, today we have prepared for you our 5 ways how you can manage to live
with $2000 or less per month and preferably without making big sacrifices.
So if you are someone who has to make ends meet with a low salary or just want to know
how you can maybe save money here and there to not see the 0 on your bank balance again
at the end of the month, you should definitely stay tuned, because these 5 ways will definitely
help you!
But before we get to the main topic of the video, first of all welcome back and if you
are new on our channel...
We are the Finance Nerds and we try to help you to fix your finances and spread our knowledge
from topics in saving money to investing!
And if you want to track your finances and your net worth, check out our video description
or the pinned comment.
You will find the download link to our free all-in-one personal finance tracking sheet
there so that you can track all of your finances in one place and now let’s start!
First of all, we should briefly clarify what "low income" actually means and who is included.
Of course, this is also very subjective, as everyone has a different perception of what
"low income" means.
In addition, it also plays a role in your perception of where you live.
Because if you live in New York you will certainly have a different perception about "low income"
than if you live in North Dakota, because the cost of living and especially rent is
quite different.
By government standards, a "low income" is defined this way: "low-income" earners are
men and women whose household income is less than twice the Federal Poverty Level (FPL).
For a single person household, the 2019 FPL was $12,490 a year.
This means if you earn under $25000 a year you count as low-income.
So now the question is: what can you do if you don't make enough money and still need
to make ends meet?
For this we have prepared 5 ways that are simple but effective at the same time.
First of all, it is important to understand on what principle these ways are based: They
are based on covering your basic needs and the important areas of your life well, despite
your low income and then working on breaking out of this cycle.
What do I mean by basic needs?
When money is tight, many tend to neglect important components in their lives such as
regular doctor visits or healthy eating.
However, there are always ways to cover these basic elements in life even on a low income.
You should focus on the 4 basic needs: Health, Transportation, Housing and Nutrition.
To break out of this cycle afterwards, our Wealth Winning Method will help you.
If you can remember our Wealth Winning Method, you will always know exactly what to work
on!
Again as a reminder, the method goes like this:
1.
you need to save more than the average 2.
you have to earn more than the average 3.
you have to invest more and better than the average.
This formula is based on the idea to really build wealth, but can also be used as a guide
to simply improve your financial situation step by step.
Today we will mainly focus on the first step: "You have to save more than the average" to
make ends meet with a low income.
After that, you can always take care of the other steps, but we have already made several
videos for that, just feel free to check out our channel.
So to name the goal again very clearly: We want to make ends meet with a small income
without making big sacrifices and not neglect our basic needs.
#1 The first way to live on a low income is to up/downgrade your home yourself.
Now you're probably wondering what I mean by that, I'll explain it to you in a moment.
A suitable and above all comfortable home to find, where you really feel good and all
conditions are met, especially with a low income is very difficult because the rents
are becoming more expensive and especially in the big cities there is also a great housing
shortage.
Now you have 2 options: Either you spend much more money, which you actually still need
for other things or you live in an apartment in which you do not feel comfortable at all.
But many have the big problem that they have more than they really need.
Ask yourself the following question: Do you really need a 3 room apartment if you live
alone?
I think not, so the first thing you should do is to see if you can downgrade your apartment
to save money.
Now let's imagine you have an apartment that is just the right size for you, so a downgrade
is not possible, but you don't really feel comfortable and you are thinking about moving
to a more expensive apartment.
Before you do that, you can simply upgrade your apartment yourself.
Try to freshen up your current rooms with what you can and make them more beautiful.
For example, you could paint the walls or put some plants in the rooms.
It may not be the optimal solution but it will definitely save you money in the long
run and that is our goal.
Maybe another example: When I moved for the first time I didn't have too much money either,
to be honest I was living on just under $1000 and you can imagine that it wasn't that easy
and my apartment wasn't the best...
My bed was in the kitchen so it was a 1 room apartment.
Not much space and used furniture, but I managed to rearrange this furniture, some plants and
a few pictures from Ikea to furnish this apartment, so that I felt very comfortable in the end.
#2 Plan your meals, eat the plan!
the 2nd way is to plan and prepare your food and then follow through with this plan and
not get weak again somewhere and still order food or buy spontaneously.
Many take their food to prepare, then do it and still buy what is on the road and that
when good food and healthy eating with low income is already difficult enough.
As an example of how I always do it: I always have my staples such as oatmeal, eggs and
milk on my shopping list and then I sit down every Sunday evening and plan my meals for
the coming week.
To do this, I use the specials brochures from the grocery stores near me and base my meals
on what's on offer.
For example, if chicken is on sale, then I plan something with chicken for Tuesday and
Thursday.
Usually I then prepare the meals the day before, or sometimes it's enough for 2 days or I cook
them during my lunch break (home office is ingenious!).
So I save a lot on food and at the same time I have the opportunity to cook healthy and
do something for my diet.
I usually don't spend more than $80 per week on food and manage to keep my fixed costs
extremely low.
#3 Set Up a Carpool when possible To reduce the cost of transportation you should
try to organize carpooling whenever possible.
This will save you a lot of money and at the same time do something good for the environment.
Think about which routes you drive most often.
These are probably the way to work, shopping and maybe sports.
See if it is possible to carpool these routes.
Do you have a work colleague in your area who always drives the same route?
Can you maybe team up with others to drive to the grocery store?
Do you see the same people at the gym all the time who are from your area?
Then just ask them if you want to ride together.
Back then, when I only went to the university, I was also dependent on my car and had to
drive about 45 minutes there and 45 minutes back, so it was a longer distance.
After my first month at the university I noticed that someone from my neighborhood almost always
came to the university at the same time as me.
Eventually we found that we could drive together for 3 days a week and could save some money.
#4 Focus on your debt payments The 4th way is to prioritize your debt payments.
It should become your goal, if you have debts, to pay them off as soon as possible, especially
if you have a low income.
Think of it this way, the debt reduces your income every month and since your income is
already low, it hurts twice as much.
But how do you do that without neglecting other things?
In the end there is only one unpopular solution: a budget.
In the budget, you should definitely give a % of how much of your income you want to
use each month for debt payments.
In the video description you can download our free tracking sheet, where you can track
your income and expenses and plan your budget at the same time.
#5 Create a saving habit.
Do you know why most people have a hard time saving money in the first place?
They don't make it a routine and even if you have a low income, your goal should be to
build an emergency fund.
Why?
Because it gives you a little more flexibility and you don't panic every time you run up
a slightly larger bill.
Because just because of the low income, a little bit bigger bills can lead to a lot
of worries, because there is no money for it.
That's why you should make it a routine to put a certain amount of your income into a
separate account every month, even if it's only $10.
And if you want to know how to manage your money, the 5 money lessons in the video on
the right will definitely help you!
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