If you were hit unexpectedly with a $1,000 or even $500 expense, would you be able to cover it?
If your answer is no, you’re not alone. According to data pulled by CNN in January of 2017, six in 10 Americans don’t have a spare $500 lying around in case of emergencies. That’s a pretty scary statistic, given that life is full of unexpected expenses, and an illness or accident suffered by you or a loved one could easily set you back that $500 (or lots, lots more) in an instant.
Saving money can feel next to impossible, especially if you’re not earning much of it in the first place. Not only is it doable, but it’s also an imperative — and it's just one of the many steps we should all be taking to be financially responsible. If you’re ready to turn your poor saving — and, even trickier, spending — habits around, there are a few things you must do.
First things first — you gotta make a budget. This will involve keeping track of all your earnings and expenses for a week (or, even better, a month) and figuring out what is and isn’t essential.
Beware of the sneaky ways we spend more than we mean to; so much of our spending tends to be accidental or incidental rather than intentional.
Try setting a daily spending limit for yourself based on your budget if larger sums give you too much anxiety, or if you find them too difficult to keep track of.
Speaking of large sums — how much are you spending on rent or housing? Is it realistic given the amount you earn? Use this ratio of rent vs. income to figure this out.
Credit cards can be useful in, logically, building credit and allowing for a little wiggle room — but only if you ensure you don’t have too many. Credit card debt can build up scarily fast, thanks to the often-exorbitant interest rates.
Figuring out one’s taxes is never fun. But this tax exemption guide includes kitten gifs, so that makes things a little more palatable, right? Who knows; you may qualify for a bigger break than you think. And don't sweat it if you need more time to figure out your taxes; you can file for a tax extension.
Are you qualified for per diem allowances at work that you may not currently be receiving? For example, is your commute long enough that your employer should be contributing toward your transportation expenses, or could you be eligible for overtime pay?
To be truly financially responsible, it helps to familiarize yourself with some basic terms and ideas, like: money orders, trust funds, tax tips, check writing, 1099 forms, and IRAs. The more financially literate you are, the more in control of money you’ll likely feel. Here are some Fairygodboss posts that will help you brush up on the aforementioned financial terms and ideas:
Let’s talk salary next. How does yours compare to the average salary in the U.S.? Are you getting paid a fair amount for your skills and experience level? These salary calculators will help you figure out how your earnings compare to others in your industry. If you’ve compared things and realized that, no, you aren’t getting paid enough. But that knowledge alone isn’t enough to improve your financial state — arm yourself with negotiation tips for getting higher pay.
Worst case scenario, if your negotiation attempts are futile and you truly aren’t earning a fair amount, it may be time to quit your job. Maybe you’ve simply worked for the same company too long to be receiving a competitive rate — recent studies indicate that keeping the same job for more than two years could mean you’re losing money in the long run. Conversely, your salary could be fair, but just not enough when leveraged against your expenses and/or debt. Consider other ways of making money on top of your full-time job; perhaps it’s time for a side hustle (or two).
Maybe you’re realizing that art degree simply isn’t going to provide for the kind of financial lifestyle you want (though, don’t get us wrong, that’s not to say it couldn’t!). If you’re going back to school with the sole intent of making more money, it could be helpful to learn what the top-paying majors actually are. Unless you’re one of the paltry few to get a full ride and living stipend, chances are you’ll still need to work upon going back to school. These high-paying jobs are great for college students.
Finally, retirement only seems forever away. If you’re going to retire at a decent age, you’ll need a decently high amount in the coffers — especially if you’re a millennial (here's how much millennials need to save).
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