I was poor growing up – living with retired grandparents. My grandfather used to say, at the first of the month, he would go up one side of main street paying bills and down the other side apologizing. (for not having the money this month). My one regret is not having started a good savings habit early. I mean, I tried a few times, not realizing how vital it is – and I wound up spending it all on ’emergencies’ that came up. Starting out poor is difficult, no doubt. It is true that some people are too poor to find a job. To have a job, you have to already have transportation, clothes, food and shelter – at least a place to shower every other day, and do laundry. But once you have a job, please, save 1% of your income, at the very least. It will be worth whatever it takes to do that.
A little advice on jobs – find a job that fits you. Not everyone is capable of flipping burgers or being wait staff or even being a gas station attendant – those jobs are hard. Find something easy, like computer programming or quantum physics. The point is to find something you will be able to do that won’t burn you out in a couple weeks. You’ve got to be able to stick with it.
The standard goal of savings is to have in a readily accessible account, two months worth of expenses. Two months of housing, food, transportation, bills, clothing expenses saved up and not touched. After 20 plus years of working, I’m not sure that I have managed to achieve that level of savings, except in Retirement Accounts – and my retirement accounts are way behind where they should be for someone turning 50 in 9 months. My retirement will be difficult – but hopefully some of you reading or hearing this will be able to do a bit better than I have.
One of my top pieces of advice is to avoid banks. They do not have your best interest in mind. The individual bank employees may be willing and able to help you navigate the system, but if you falter, the penalties are mind numbingly oppressive. I found an old post in LiveJournal from 2009 where the bank arbitrarily raised my mortgage payment and I over drafted by Fifty Three Cents – and it cost me $102 in bank fees. Now, many financial establishments have it set up where your overdraft protection takes funds from your savings account automatically. But if you don’t have that cushion, they will penalize you for not having the money – by charging you more money. That is on top of giving you less interest if you have only a very little money – and other systemic penalties for being financially disadvantaged. Which is why I highly recommend using either a local credit union or some of the online-only financial intuitions.
Your local credit union can be very helpful in getting your savings going. You can direct deposit your paycheck into the member checking account and have an automatic transfer to your savings account. Having two month’s expenses in this savings account is really beneficial – if you can get there without using it. If you are like me, you need something a little more inconvenient to access, but just as easy to contribute to. This is where Acorns comes in – with Roundups! Some other online ‘banks’ and even credit unions are now using this clever method of keeping track of what you spend, and rounding each purchase up to the next dollar amount to siphon that off into your savings. This way, you will barely even notice what you are putting into your Acorns savings – and don’t have to keep an eye on it.
How best to keep track of your bills, expenses and savings? Well, there are a lot of places offering to do that – but Mint was one of, if not the, first to do so – and they did it so well, that Intuit bought them out! They do make their money by getting you offers on cards and loans and such, but you don’t have to. Sometimes, they do have really good offers on refinancing or balance transfer credit cards – but you shouldn’t rely on credit cards, and always try to pay them off every month. Anyway, Mint allows you to track your financial accounts, all in one place. You can’t do transfers or pay bills, but you can see your whole financial footprint in one place.
Another tool in my escaping poverty arsenal is Credit Karma. They started out as just a site offering you a free look at your credit score from each credit bureau, just for looking at ads for other financial services. But now they have their own checking and savings accounts – tucked away on their website, but not too difficult to find. I am now using their checking as my Daily Spend account. It is a checking account with a debit card – and I keep the account low so I don’t overspend on it. You can even set up an accounts tracker kind of like Mint on their site as well.
Those three places will help get you into good financial shape. However, if you are like me, having all your eggs in just three baskets isn’t enough of a diversified portfolio to keep your hands off of it. So, in addition to those three highly recommended places to start, I’ve also starting savings or investments with Aspiration (good for the environment!), Robinhood, and I even have a small investment at E-Trade. But investments are something to look into AFTER you have a good savings built up. Two months savings in your credit union account – and another two months in your Acorns account. Then, you can start a vacation savings account and finally, retirement accounts. Of course, if your job offers a retirement plan, especially if they have any matching at all – take full advantage of that! My company offers to match up to 3% – so I took advantage of it as soon as allowed (6 months employed, I think) – and just upped my contribution to 4%.