Many financial outfits will recommend investing in anything, retirement, stocks, or otherwise, as soon as possible. While this is generally very helpful advice if you have boatloads of cash just sitting around, for the average consumer the question of when is going to be a very important one indeed. If you are living desperate paycheck to desperate paycheck, chances are any investment will take away from some kind of important service, medication, or even just a hobby that gives you the drive to go another week. So, let’s go over some important tips for someone in this kind of situation, as well as some solutions.
Taking Stock
I am not going to tell you investment will let anyone rise out of poverty, and for many people, even the thought of investment is a cruel mockery of their current situation. For anyone in this kind of world, it can seem very daunting to recognize that someday you won’t be able to work, which means a fundamentally uncertain future. But, the first step to avoiding the worst cases is to take stock of your current situation.
There are many people who have gone through this process in great depth. If you want more expertly researched knowledge, click here for a summary. But, if you want the simplest summary of the tips, they start with writing down expenses. You can’t tackle a deficit in anything without knowing the amount of red you’re actually in.
This should ideally include every single expense, subscription, and paycheck. If you have multiple jobs and are trapped in the subscription hell of modern entertainment this will be complicated, and likely require multiple months and many headache-inducing phone calls to fully achieve. Even after this process, you will receive unexpected charges from institutions to which you swear you canceled your subscriptions, but fear not since knowing that will stop a drain on your bank account in the future.
Shaving Off the Top
Every financial advice article will recommend shaving off expenses, canceling things you love, and marching forward with the stoic drive of a superhuman money maker, and you can’t really avoid that kind of outcome. Often, people will emerge from financial hardship with well-earned trauma from simply not having the money to do things. But, if your income isn’t going to change, the only way to get the money to start climbing out is to take away things draining cash.
This can include anything, from meals out to creature comforts. This is hard, and the satire of modern money-making never recognizes that people need some things to live, food, water, and nowadays a phone for making important calls and emailing coworkers. Building on solid financial documentation of what you’ve spent money on, you can start ranking based on importance. You should have a penny-pincher mindset for this, but be specific at all times.
If you want more super useful information on how to get some spare cash for use in this kind of activity, here’s a great article by the charity United Way for doing just that: https://www.unitedway.org/my-smart-money/immediate-needs/i-cant-cover-my-expenses/how-to-cut-monthly-expenses#. Sacrifices are necessary, anger at where you are is okay, but getting out of this will take more than just exhausted frustration. In general, be proactive and optimistic as much as possible.
The Start to Discretionary Income
No income should be truly discretionary for the average person rising out of their background, but if you’ve done well consistently and actively you should start seeing some improvements. Overdraft fees or credit card debt will start to wither away, and you may end up with a few bucks for a fast food meal here or there. If you’re not born with the means, you can at least give those means to your children or loved ones, and you may start to see numbers grow that you can use to help those same people.
Now is the time to invest. Many institutions are perfectly fine with encouraging you to go earlier, but if you start an account you can’t upkeep chances are you will be in a hole deeper than you can fathom. A charge for canceling an account isn’t much if you have that money, but when you are running against the $0 mark every month it can be a life-changer. In general, you can begin in this order: savings account, IRA account, and other investments.
IRA accounts are possibly the most important part of this kind of transition. So, even if the first few steps are a pain, this is the goal. Let’s talk a bit about your options in this realm, since to many people personal finances are a truly mysterious phenomenon.
Retirement Accounts For the Future
Saving money is something you should aspire towards, and nothing is more active in preventing old-age problems than a retirement account. IRA accounts are widespread, easy to apply for, and often can invest your money to start making passive income. This is a super quick way to get started on your future, but again, take it slowly, carefully, and step-by-step from the start.
There are many types of IRA accounts, from Roth IRAs to companies like Gold Storm IRA Investing that take your money and transfer it to physical capital. Regardless of your political leanings, capital and its associated capitalism is simply the act of generating this passive income that can have real effects on the way you live.
Don’t let the physical nature of gold or of a house take away your achievement. They may be outwardly modest, but physical things are the real goal. Numbers on a computer screen are cool, but they won’t feed your kids and they definitely won’t take care of you while you’re old. So, take your finances one step at a time and you may one day be able to take the step into housing, investing in a car, or buying an expensive asset, and that asset may be providing the financial stability you always wanted for your descendants for generations.
