If you are struggling to get ahead financially, the good news is that you are not alone and there are a growing number of resources available to you. The unfortunate news is that the financial statistics in America do not paint a pretty picture.
Financial Statistics in America
The numbers show that median household income was $61,372 according to the 2017 US Census Bureau’s Current Population Survey. The median income for an individual man working full-time was $52,146 as compared to $41,977 for a full-time woman.
Despite growing household earnings in the United States, debt and ongoing consumerism continue to plague financial success for many individuals and families. According to Magnify Money, the median household savings account in 2019 is $4,960. Shockingly over half the population has less than $1,000 is savings according to another survey by Go Banking Rates.
What About Retirement Savings?
When it comes to retirement savings, only half of American households have any retirement savings in a 401(k) or IRA, according to the Center for Retirement Research in 2017. 55% of Americans also believe that they will need to work past the age of 65 (Northwestern Mutual).
If you are behind on where you would like to be financially, you have a few options to close the gap between where you are today and where you would like to be:
- Spend Less
- Earn More
- Work Longer
- A Combination of the Above
What You Can Do Today to Spend Less and Save More
Below are ten actionable items that can reduce your spending today. If you want to get hyper aggressive about accomplishing your goals, consider earning more to close your current financial gap. Check out our article on adding a side hustle.
- Monitor your automatic subscriptions. Review all payments that come through your credit and debit cards monthly. Modify and delete unnecessary subscriptions that you are not using. Depending on your subscriptions, this could save hundreds of dollars each month (gym, cable, etc.).
- Cut out expensive cable. Seriously! How much is it really worth to you? Netflix, Hulu, Amazon Prime and other internet streaming options provide countless opportunities for television entertainment. If that’s not a choice that you are willing to make, call your cable provider to renegotiate your current contract. Providers would prefer to reduce your monthly bill opposed to losing you as a client altogether.
- Brew coffee at home in the morning, and if you are an afternoon coffee drinker, bring an alternative such as an iced cold brew packet to the office with you. Adjusting your twice-a-day coffee habit from bistro-bought to home-brewed can save you $2,000-$3,000 every year.
- Dine in at home and make enough for leftovers. Then… be sure to actually eat the leftovers! It is easy to convince yourself that dining out can be less expensive than buying all of the items to cook at home. If this is your philosophy you are likely overlooking the savings associated with stretching a home-cooked meal for lunch or dinner the next day. Consider meal planning once a week and schedule your leftovers. (Take out a pen and paper and write down your meals for the entire week before you go shopping. Meal planning also creates time efficiencies at the grocery store and when deciding what’s for dinner). Try meal planning for a month and you will be surprised by the amount you are able to save with proper planning.
- Consider coupons. Gone are the days of clipping coupons. Many of the large grocery retailers such as Safeway now use digital coupons that connect directly to your customer account upon checkout. A few minutes on your smart phone could lead to $5-$20 or more saved in the grocery line.
- Switch to store brands. Are you buying top brands and organic? If your dietary situation allows, challenge yourself to modify when appropriate. If you are uncomfortable with swapping everything overnight, review your grocery list and see if there are items such as eggs and dry cereal that might be relatively easy to adjust. These items can cost nearly twice as much as their store brand counterparts. The more you switch, the more you’ll save.
- Avoid available upgrades. Our society is based around upgrades. Go through a drive-through restaurant and they’ll ask you about increasing the size of your meal. Grab a pedicure and they will ask if you would like a “more premier” service for another $10 or $15. Downsizing our expectations across multiple categories will add up and make a significant impact on your pocket book.
- Turn down the heat. Heating and cooling a home takes energy that costs you money. Adjusting your thermostat by a few degrees can save money on your monthly bills that will add up over time. According to HomeTips, you can save approximately 3 percent of your energy costs for every degree you turn down a thermostat over a 24-hour period.
- Swap your vehicle with one that is more affordable and/or fuel efficient. If you are currently driving a car that is costing you a hefty monthly payment (more than 10% of your monthly take-home pay), consider selling the car and purchasing one that is a better compliment to your path toward financial freedom. A popular rule of thumb is to spend less than 15% of your take home income on transportation (car payment or savings toward a future cash purchase, insurance, gas, maintenance, Uber, etc.). Another more extreme rule is that you should not buy a new car off the lot until you have a net worth of over a million dollars.
- PAY OFF YOUR CREDIT CARDS! According to the 2019 Federal Reserve’s Consumer Credit G.19 Report consumer debt is $3.999 trillion ($12,169 per capita). If you carry a balance on your credit card, work tirelessly to get it paid off. The amount that you are spending on interest alone can be redirected to achieve other financial goals. The amount that you are paying on interest PLUS the amount you are paying toward your principal balance can be the difference between being on-track vs. off-track financially once your average monthly payments are redirected to pay yourself instead of the bank.
Wealth Driven Mindset understands the challenges of managing your money and getting ahead of your financial goals. We believe this process takes hard work, discipline and—in some cases—a coach to help you get there.
If are interested in learning more about our financial coaching services, click here.
