Financial literacy has historically ignored the perspective of people with no wiggle room in their budget. On a recent episode of my show Money Rehab, a listener wrote in with the subject line “Money Tips for When You Don't Have… Money.”
Some people that parade as financial experts, like Dave Ramsey, will tell you that if you’re living paycheck to paycheck, you’re screwed. That is wrong. You are not screwed. And I know this for absolute fact, because I’ve been there myself. I’ve heard soundbites from financial experts that made me feel like I would never have financial security. It’s paralyzing.
When you’re living paycheck to paycheck, it’s hard to hear about how important it is to take steps towards saving for retirement, investing, or even making an emergency fund. I get it.
And I know you are going to be okay. This is not the end of your story. You have a road ahead of you and you’re just at one point along the way. Now, that does not mean that the road will be short, or easy. It will be long, and some points will be hard. But if I can do it, you can do it. And I mean that completely.
This post is for the readers who are not looking for ways to make more money, or how to spend less money. There will be more posts for that. If you’re already working three jobs, it’s impossible to just tack on a side hustle. This post is for people who are in a position where they expect to be making the same amount of money, and spending the same amount of money for a while; but you’re hoping (and I believe), that will change in the future, and when it does, you want to be ready. I got you.
Here are three habits I’d recommend that you get into:
1. Negotiate everything.
All of your money may be accounted for in your budget, but negotiating is a way to free up a fraction of the expenses in your spending plan. Negotiating doesn’t cost a thing, but it could save you big. You can negotiate your rent, the APR on your credit card, your cellphone bill, anything is negotiable. I can speak from my own experience of childhood financial insecurity and tell you that when I was first getting into the habit of negotiating, I would get major imposter syndrome. But having these conversations where you’re in the position of power and asserting control over your finances— that helps quiet that voice in the back of your head that’s telling you that you’ll never have enough, be enough. With practice, and more of these conversations, that voice will become a faint whisper. Let’s be honest, it will never be gone entirely, but you’ll barely hear it over the sound of yourself negotiating like a Boss Bitch.
2. When you’re looking at your spending plan, don’t look at just how much you’re paying, but look at when you’re paying.
For example, I’ll give you my favorite mortgage hack: without tweaking the amount you’ve decided to contribute monthly to your mortgage, make biweekly payments. You can determine how much to pay biweekly by dividing whatever you’re paying monthly in half: that will be what you pay every other week.
In other words, if you need to pay $2,000 monthly, you would instead pay $1,000 every other week. If you had a $300,000 home, by paying biweekly instead of monthly, you would save more than $40,000 in interest.
“How does that work? Magic?” you ask. It’s really just an organizational trick to make squeezing in a few extra payments a little more feasible to you.
Essentially you’re taking the same amount you would be paying monthly, but instead of the 12 payments you would make on a monthly schedule, you’re actually making 13 payments a year (because that’s how it shakes out when you pay biweekly). This scheduling shifteroo can knock years, and tons of interest, off your mortgage.
3. Start getting in the investing mindset by playing with a free stock simulator.
I know investing in the market may feel like a far-reach right now, but when (not if, when), you have some money to play with, investing is the best way to build wealth.
A stock simulator is a way to dip your toe in the investing waters, without actually spending any money. It allows you to essentially "play house" with the stock market; you get to experiment and see what would happen if you were to invest a couple hundred dollars in a stock. And let me be super clear here: it is just a simulation; if the money grows in the simulator, you’re not actually going to be getting any returns... but you’re also not losing anything, and you’re not spending any money, while still learning a lot. It will also get you more comfortable with investing, which is a hurdle I recommend you tackle. The best way to build wealth, real wealth—the kind that will affect the generations of your family that come after you— is to invest.
Here’s the last thing that I’ll say: balance isn’t just for your checkbook. If your spending plan is a source of stress, try to balance it out with another money practice that celebrates your wins. Keep a “Success Folder." I do it! Whenever I make a payment on time, I keep that shit in my success folder. Whenever I use a coupon and save a little on groceries, I save that receipt! When I was broke and in debt, this was my financial self care. When I looked at my incoming bills: I felt like a failure. But in those moments, I could turn to my success folder, and know that I was doing all the right things to get me to where I wanted to go.