Most financial advice is written for people who already have money. Not the wealthy, but people who actually have disposable incomes. With a few adjustments, they can follow sage financial advice like saving a certain percentage of their income each month, or cutting extraneous expenses to save money.
But if you’re poor — actual, hovering around the poverty line, poor – most financial advice doesn’t apply. Because once you (barely) take care of the necessities, you usually have nothing left until the next paycheck – and that check’s already spoken for.
However, just because you’re dead broke, that doesn’t mean that there aren’t little things you can do to help improve your situation. Once your situation improves, you can then go to financial advice sites like CNNMoney or Banking Sense to get even more information.
Track Your Spending
Chances are, you are hyper aware of where your money goes each month. Even if some of your expenses are subsidized, you know exactly how much you have to spend on rent, utilities, and other necessities. The thing is, no matter how tight your budget, there’s always hidden spending.
For example, if you don’t have a bank account you have to pay fees to cash your paycheck. You may also have to pay fees to pay your utilities at a pay station rather than send in a check. And then there’s the fact that you have all this cash in your pocket. Cash is notoriously difficult to track because, unless you get and keep receipts every time you spend, you have no paper trail.
Even if you think you know where every cent goes, you should keep track of all of your spending. This means getting receipts every time you make a purchase, and writing everything down. A cheap binder with loose leaf paper or a notebook from the dollar store works fine. Tracking can show you potential leak, and help you spend more efficiently. You might even find little things that you can cut to save money.
Not having a checking account can end up costing you a lot of money. If you have to pay fees to cash your paycheck, you could end up paying thousands of dollars. That’s money you could have spent on food, shelter, or even savings. More importantly, that’s money that you earned. Having a bank account won’t just save you money on fees; it can also make it easier to track your spending.
Companies like Bluebird, Simple and Green Dot all offer online banking alternatives, with debit cards, direct deposit, and online bill pay, and many have no fees. You can access your account anywhere that has internet access, including the computers at the public library – just make sure you completely log out and don’t have the computer save your password. Many services will allow you to deposit checks through a mobile app, or at physical locations like Walmart or Walgreens.
Choose Your Devil Wisely
There are plenty of resources warning you not to use businesses that take advantage of the poor. Those resources are aright, albeit unrealistic.
For example, if your washing machine dies, your options are to:
- Buy a new one;
- Buy a used one,
- Use someone else’s and spend gas and time getting there;
- Spend upwards of $20 a week, not including gas and time, washing your clothes at the Laundromat; or
- Spending upwards of $20 a week to rent a new washer.
Sure you could save up and eventually buy one, but that’s not always realistic. You know how it is, set aside $20 today, and tomorrow you’ll have a $20 emergency. Meanwhile, you’re spending another $20 on the Laundromat each week.
If spend that initial $20 to rent a washing machine, you might still have that $20 emergency, but you’ll also have a washing machine. Avoiding money traps that exploit the poor is easy, when you’re not poor. When you are poor, it’s better to choose your devil wisely.
Remember to keep track of your expenditures. Find out what you’re spending on and learn ways to minimize these expenses. Avoid incurring debt as much as possible. It might set you back a few years from reaching financial stability. The road to becoming financially capable might be hard, however, if you persevere, you can definitely reach it.