A SurveyMonkey poll found that 63% of middle-class American adults feel they’re living paycheck to paycheck, with less than $500 left each month after expenses. Clark Howard says a few small changes can help people start building a financial cushion.
More Americans say they're living one paycheck away from the financial
edge with barely enough to cover expenses, let alone an emergency.
So how can you get ahead?
A penny on its own may not sound like much, but our consumer
advisor says if you can start with just one penny in a year,
you may be surprised how much you've saved. I was out of work.
For probably close to about a year.
When Sam Fernandez lost his job,
what he had in savings couldn't cover his bills.
It just snowballed, you know, and it got completely out of hand.
And then, you know, we kind of just ran out of funds.
I spoke with Sam earlier this year about
his journey to get his debt under control
and to get out from underneath it.
He's not alone in the struggle.
A poll of American adults this year finds 63%
of middle-class respondents
say they feel like they live paycheck to paycheck.
With less than $500 left after expenses each month,
so how can you build a cash reserve?
Consumer advisor Clark Howard says the key is to start small.
If you have never been able to save any money,
start by saving one cent of every dollar you make.
The average Boston worker earns almost $1,700 a week.
Using Clark's rule, put $17 aside, or about $68 a month.
In six months, you'll have more than $400.
$300.
Then, after six months, step it up a penny to about $135 a month.
In one year, you will have saved more than $1,200.
If you do it in baby steps,
it's amazing how much change you can bring into your wallet.
While you're building your savings,
Clark says there are simple ways to cut spending,
starting at the gas tank.
Follow Clark's tank half-empty rule.
And instead of waiting until you're on past empty,
You stop once you hit half a tank
when you see gas that's a deal somewhere.
Fill up then.
That way you're not filling up in a panic
and have time to search for the best price.
Next, when you're buying anything, for one month, try using cash only.
No credit, no debit, no tap to pay.
And you'll be surprised how much less money you spend
when you're having to spend actual money.
And the third thing I want you to do is I want you
to turn the thermostat down this winter.
With heating costs on the rise.
Turning the thermostat down just two degrees can save homeowners
about 3% on their monthly bills, or around $75 this winter.
For Sam, spending changes helped, along with using a non-profit
credit counseling service to consolidate his debt and knock down
his interest rates, saving him hundreds a month in payments.
You know, it's definitely a huge sense of relief because,
you know, I kind of feel like there is light at the end of the tunnel
You can call your credit card and ask for a lower interest rate,
though it helps if you're a long-time customer
and you have a history of on-time payments.
You can also consolidate your credit card debt onto
a zero-interest balance transfer card,
but be ready to pay that off within a year or two.
Bottom line here, small changes can potentially add up
to some very big savings.
