Yahoo Finance Are You Just ‘Getting By’? — 7 Ways You Can Get Ahead Instead
It’s no secret that people are struggling with rising costs and how expensive life has become in the last few years. Due to these stubborn inflation figures, the Fed has raised interest rates to attempt to cool the economy down. The end result is that more Americans are barely getting by financially as credit card balances rise.
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A GOBankingRates survey asked Americans about their financial situation at the end of 2023. Here’s a look at what you can do if you’re just getting by and want to make changes to get ahead financially.
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28% of Americans Are Just ‘Getting By’
The survey found that 28% of the participants admitted they were struggling and just getting by financially.
Here are some additional highlights from this survey:
31% of women and 24% of men surveyed are just getting by.
The 55 to 64 age group were most likely to say they were just getting by, with 40% of respondents selecting this answer.
10% of the female respondents and 8% of the males admitted that their financial situation was the worst it has ever been.
Here are some ways you can go from just getting by to getting ahead financially to improve your quality of life in 2024.
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How Can You Get Ahead Financially?
How can someone go from getting by to getting ahead? GOBankingRates asked financial experts for advice.
Consider How You Can Change Your Behavior
“Your financial inflows (earnings) must exceed financial outflows (expenses), which is simple mathematically but very difficult behaviorally,” said Robert R. Johnson, Ph.D., professor of finance at Heider College of Business, Creighton University.
The one aspect of personal finance that rarely gets discussed is the behavioral component, as many experts will assume that people make logical choices. But money management is often about behavior instead of just counting numbers and balancing budgets. There are also likely many people who are struggling financially for the first time and are uncertain about handling this.
What can you do? Here are a few activities that could help point you in the right direction:
Track your spending for a few weeks.
Identify activities that could be hurting your budget.
Compare your spending to your income to see if it matches up.
Look for problem areas that could be improved.
The goal is to consider how your daily behavior and actions could impact your overall financial situation. With life getting more expensive, you want to ensure that you’re taking proactive measures.
Create a Detailed Budget
“Start by creating a detailed budget outlining your income and expenses,” said Taylor Kovar, CFP, founder of 11 Financial. “Track your spending habits to identify areas where you can cut back or reallocate funds towards savings and investments.”
If you don’t know where your money is going, you’ll never know how to save more. As you change your behavior, you’ll also want to draft a detailed budget. Creating a budget is like making a plan that helps you outline the steps you need to take to move in the right direction.
Kovar elaborated, “Establishing a budget provides a clear picture of your financial situation and empowers you to make informed decisions to improve your financial health.”
The good news is that budgeting isn’t just about restricting yourself and finding ways to cut back. You want to use budgeting as a tool to help you create a sustainable personal finance plan.
Johnson noted that you should take your personal preferences and values into account when creating a budget. You’ll want to create a financial plan that allows you to spend money on a few categories that bring you immense joy so that you can stay focused in the long run.
Johnson added, “One should not feel guilty about spending money in a manner that some might consider frivolous. For example, that daily latte purchase may bring you a great deal of happiness– what economists refer to as utility. The key is to budget in order to maximize one’s own unique preferences and not those of others.”
If you feel completely restricted by your budget, you may get fed up and give up on it prematurely. It’s essential that you factor some joy into your spending plan.
Make a Plan for Saving
“You should not simply budget and track expenses, but you should also budget for savings,” said Johnson. “You don’t successfully build wealth by taking what you have left after all your expenses.”
You want to create a detailed plan that will help you start saving so that you’re not just scraping by. The problem with not saving from every paycheck is that it’s easy to fall behind on bills, which could lead to you feeling overwhelmed constantly. When you’re always overwhelmed or stressed out, it feels like you’ll never get ahead. This is why it’s essential that you find a way to start saving so that you don’t feel stuck.
How can you make a plan for saving after reviewing your budget?
Look for items you can cut out. You’ll want to find fixed costs that you can eliminate from your budget as you make savings a priority. This may require you to cancel that gym membership or limit how many streaming services you have access to.
Address your problem areas. If a spending category is holding you back, you’ll want to look into that. You may be spending too much on dining out or transportation. The sooner that you address this problem area, the sooner you can start saving up so that you’re not always trying to catch up.
Cut back on certain services. While you can’t eliminate every fixed expense from your life, since you still need a phone and some form of transportation, you can find ways to cut back. You can ask for a discount or reduce the premium tier of a service.
Set specific savings targets. As you change your spending, you want to think of a savings target to have something to strive for.
This leads to the next step:
Build Your Emergency Fund
“Make saving a priority by setting aside a portion of your income for emergency savings and long-term goals,” said Kovar.
Understandably, the idea of planning for a rainy day can seem challenging when you’re just getting by. The goal is to slowly make changes until you get to a point where you’re not struggling between paychecks so that you can start building. An emergency fund could also help you with unexpected expenses, so you don’t have to rely on credit cards to get by.
Kovar added, “Aim to build an emergency fund equivalent to three to six months’ worth of living expenses to provide a financial safety net. Additionally, explore investment opportunities, such as retirement accounts, index funds and real estate, to grow your wealth over time.”
As your savings grow, you can start researching various investment options so that you can feel optimistic about your future.
Work on Paying Down Your Debt
“Develop a strategy to pay down high-interest debt systematically while avoiding new debt whenever possible,” said Kovar.
Many Americans are struggling or just getting by, because their credit card payments have gone up due to rising interest rates. CNBC reported that Americans owe over a trillion dollars in credit card debt due to issues caused by soaring inflation and higher rates.
Kovar shared advice on paying down your debt: “Prioritize debts with the highest interest rates or consider consolidating multiple debts into a single loan with a lower interest rate. Implementing a debt repayment plan can free up more funds for savings and investments, allowing you to make progress toward your financial goals faster.”
The sooner you pay down your debt, the sooner you can focus on building your wealth.
Start Investing Your Money
“Individuals need to be taught to invest to get ahead and not simply to save,” said Johnson. “The surest way to build true long-term wealth for retirement is to invest in the stock market.”
As you start to pay down your debt and save more money, you’ll want to look into different investment options so that you can have your money earn money for you. At the very least, you’ll want to ensure that your funds are stored in a high-yield savings account so that your money keeps up with inflation. Once you have enough money saved, you can start thinking about other investments, like the stock market or real estate.
Look for Ways To Increase Your Income
As your investments start to grow, you can also explore ways to increase your income by exploring side hustles and other opportunities that may be available. A lot goes into this step, but it’s important to consider, since this could be the final piece that helps you change your financial life.
Closing Thoughts
If you’re just getting by financially, you’re not alone — many others are struggling out there. It’s essential that you create a plan to make changes before it’s too late, because you’ll want to address your financial issues before they add up even more.
Survey methodology: GOBankingRates surveyed 1,039 Americans aged 18 and older from across the country between Nov. 9 and Nov. 13, 2023, asking ten different questions: (1) How would you rate your financial well-being/situation at the end of 2023?; (2) How much do you want to realistically save in the next year?; (3) What types of investments are you considering for 2024? (Select all that apply); (4) Will you be in debt in 2024?; (5) Will you have an emergency fund going into 2024 and how many months will/would it cover?; (6) Which best describes your top financial goal for 2024?; (7) Are you planning for any of these major milestones in 2024? (select all that apply); (8) What is your top financial stressor heading into the new year?; (9) Are you planning for any major job changes in 2024?; and (10) What would you like to have happen the most in 2024?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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This article originally appeared on GOBankingRates.com: Are You Just ‘Getting By’? — 7 Ways You Can Get Ahead Instead
