If you are an American who lives paycheck to paycheck and struggles to make ends meet, you are not alone. Many U.S. residents work more than one job to meet their financial needs and obligations.
The U.S. Federal Poverty Guidelines are used to determine financial eligibility for certain Federal programs. The Census Bureau updates the poverty threshold information annually.
The official 2019 federal poverty “guideline” (we are advised to avoid using the term “level”) for a single-person household is the income of or less than $12,490. A family of four is officially impoverished (poor) with $25,750 or less annual gross income.
Even after years of thrifty habits by people well above the federal poverty standard, unexpected medical expenses can wipe out a lifetime’s worth of savings in a matter of months.
It is a financial fact that it is easier to build wealth by saving money and investing it rather than spending it. “A penny saved is a penny earned,” observed Poor Richard’s Almanac, written by founding father and genius inventor Benjamin Franklin.
Franklin is the man credited with passing down the powerful compound interest Rule of 72, known among wealth builders as the 8th Wonder of the World. The rule says, “If you divide the interest rate into 72, the quotient will be the number of years it takes money to double.”
Perhaps math isn’t your native language? Allow me to help: If you invest $100 and earn 10 percent compound interest – where interest earned adds to the principal balance to increase the investment amount which affords more investment opportunity – it will take about 7.2 years for your original $100 to double.
Investors know that the stock market returns each year, on average, 10 percent gains. This level of earning is the yardstick by which other investments are measured.
Who do you know who consistently earns 10 percent or better from their investments? Congratulations if you or your associates have mastered the skill of winning the savings game.
The flip side of increasing your personal worth (estate) is that you need to have ready funds to invest. This is where Franklin’s “penny saved, penny earned” comes in.
In addition to monies you bring in from a job, rental property, alimony, and other income sources, the prudent and practical prepper will combine earning money with saving money. Properly executed, there may even be funds left over for some rewards and recreation.
True survivalists learn from history and understand that an economy that runs on fiat currency (paper money unbacked by any tangible asset such as gold or silver) can’t last forever. But while we still operate under it, we might as well take advantage of every opportunity to save paper bills or digital debits when purchasing life’s myriad needs and wants.
Following are simple (but not necessarily easy) financial survival hacks to help you prepare for the proverbial rainy day:
- Cut the expensive treats.
Did you know that smoking a single pack of cigarettes a day costs more than $2,000 over 12 months? Check out your credit card statement and take a steely look at how much liquor and restaurants are racking up in a billing cycle. Do you indulge in snacks when you gas up instead of planning ahead and bringing lower-cost provisions with you?
Make economizing habitual by just saying no to your every passing whim. Going without a bottled Frappuccino won’t kill you – but it will save you several bucks. And those dollars add up. Kick the Starbucks habit and save $5-$10 a visit. Put $5 a day for 30 days – one month – into a piggy bank (or envelope) and you will have $150 in savings.
Resist the urge to splurge when Lady Luck smiles on you and brings you a winning lottery ticket or other unanticipated bonus. Spend 10-30 percent on yourself and save or invest the rest with compounding interest.
- Upgrade incandescent light bulbs to CFLs or LED lights.
Compact Fluorescent Lights (CFLs) use a quarter of the energy of incandescent bulbs and last for years. After traditional incandescent bulbs, they are the cheapest option. Some people don’t like them because it takes them a while to warm up to full brightness and they also contain a small amount of highly toxic mercury.
Although they are more expensive, LEDs light up instantly, have the efficiency ratings of CFLs, generate a warm glow without getting hot to the touch, and can shed light for decades.
The cost for LED bulbs is going down and, for the price, they are the best lighting option going, hands down. Replacing only four or five light bulbs that get used the most can produce an annual savings of $45 or more.
- Shop for cheaper auto insurance.
Auto insurance is mandatory and can be quite expensive. But many people don’t know that insurers are seriously competing for your business and have ways to lower your premium without sacrificing coverage. Ask about credits for a safe driving record, multi-vehicle household, or anything else the agent can suggest.
If your auto insurance agent is hard to contact, find another one. Quite honestly and meaning no disrespect, insurance peddlers are a dime a dozen. A good agent answers your questions promptly and offers excellent ideas on how to tailor your policy and premium.
Visit the competitors’ websites or give them a jingle. Get a quote on your current coverages to compare apples with apples. Raising the deductible (how much you pay per claim before the insurance pays) lowers the monthly payment, called the premium. This may or may not be appropriate for you but it is a bargaining chip.
If you find a lower price, contact your current insurer to see if they can match the rate. Savvy shoppers can save hundreds of dollars on car insurance every year by being proactive in lowering their rates.