The push to raise the minimum wage to $15 made the headlines, with plenty of controversy. Fast food workers, retail, customer service and a variety of minimum wage workers were united in one thing. At minimum wage, even working full time at just over $15,000 a year they are just $50 from the poverty level. No one would deny that at that pay level, workers need more money just to survive. Raising the minimum wage would have a positive effect on those workers, but could mean drastic changes for the businesses that need low-wage workers to stay in business at all.
While the powers-that-be campaign and wrestle with the details, many customer service, retail and fast-food workers struggle just to pay the bills. No matter what a person’s income is, no one can afford to throw money away. Sound financial management is even more important when there’s less money to manage.
There are many ways to make a small salary stretch. Whether you’re working one job or two, take some tips from Yahoo Finance to make your paychecks last.
No matter how much you make, you have to spend money. But overextending on housing is one of the ways low-earners throw money away. Buying a house is a good financial investment if you can afford the monthly mortgage. But that’s not the only expense you’ll have. Buying a house instead of renting means you’ll pay a monthly mortgage payment, utilities and any necessary repairs and routine maintenance. If the air conditioning goes out, there is no landlord or rental company to call. You’re responsible for whatever goes wrong.
DIY (do it yourself) renovations are all the rage, but the cost of renovating a house can escalate if you don’t have a good inspection and a contingency to cover the renovation costs and any surprises that might be lurking behind the drywall. Mold, termites or unpermitted remodeling can cost a lot of time and money, wiping out any savings you gained buying a fixer-upper. Not every renovation will pay for itself or add value to the house. You may find the pool you just had to have makes the house difficult to sell later on. You may have gotten a great deal on a 3500 sq. ft. house, but you’ll pay hefty electric and gas bills just to heat and cool it. Renting may be the way to keep down the costs while you build up a solid down payment and contingency fund.
You may need a car to get back and forth to work, but check out public transportation before you commit to a car payment. If you have to buy a car, look for one you can pay for or you may end up paying more in down payments and interest than you can afford. Is driving the latest model with all the extras worth saddling yourself with $600 car payments? A minimum wage paycheck doesn’t stretch far enough to pay for a car payment, insurance and maintenance costs, no matter how handy you are.
Savings plans are a good thing. Putting away $10 or $20 a paycheck into a savings account or money market every week adds up over time. Long-term savings are a good idea, but with a small paycheck, you’ll need to be able to access savings for emergencies without paying penalties. Many companies offer 401K savings plans, but if you’re young and need the money to make a mortgage or car payment, you’ll pay fees and interest, ending up with less than you put into the account.
These financial tips are useful regardless of the amount of your paycheck. Until the minimum wage increases, spending wisely is the best advice.
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