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I make a "decent" salary in the low six figures and I'm able to save over 25%
I guess you are.
For someone who makes six figures to tell someone who makes 30-thousand -- or even say half that much -- that, "I save xx" could be seen as as coming from someone who can't relate to the issue, and so whose comment is absurd to even proffer.
I have more than six months of living expenses saved, but only because I live at home and have been prepping for a big move. I couldn't imagine if I was in the situation the OP described, living paycheck-to-paycheck and having to save like this.
Pay for Cable? A Cell phone? Drive a more than $2,000 car? Etc
I lived VERY poor till I had built up an amount of money that allowed me options.
Americans have their priorities screwed up in general.
I think you're right. At almost any income level, whether you save or not is a choice. Most Americans simply broaden their definition of "necessity" right up to their income level so they not only can never save, but they must plunge more deeply into debt to pay for all their necessities.
Saving money is important and I agree with the others about the 6 month thing, but there's another topic in this thread that's important and relevant.
So...I make $10 an hour, or like $25,000 or less a year, what do I do? How do I possibly save money? What do I do? You need to not worry about saving money, you need to worry about investing in your future to raise your income. Obviously I am not suggesting financial degeneracy, but let's be realistic, you can't support yourself on these types of incomes and save for the long term.
Saving money is for people who have livable incomes. If you have a barely livable income or not livable income, a better priority is to live with bare minimum amounts of saving, keep expenses to an absolute minimum and spend every extra cent you have investing in your future. You are a startup company, and startup companies do not spend time worrying about accruing cash on their balance sheet. Neither should you.
In general I think one of the flaws of the advice on these forums is there is a tendency to give advice on stretching the dollar over that of raising incomes. Which is understandable to a point, since it's easier to give that kind advice as it is less personalized.
But the core problem with penny pinching strategies on low incomes is most of those jobs are not scaling up with inflation and you are going to beat your head against the wall trying to figure out how to build a nest egg on such a slim margin. And even if you can do it this year, if your job isn't keeping up with the times or keeping up with inflation you are fighting an unwinnable war. Don't fight battles you are destined to lose.
Let's be clear: if you are making a minimum wage or close income...get out of this thread. Don't listen to the guy who makes triple your salary about how possible and easy it is for you to save money. He is the casino and you are playing blackjack against the house. You are going to lose. Work on being the casino, then come back to this thread. The advice will be much more pertinent, relevant and attainable.
Saving money is important and I agree with the others about the 6 month thing, but there's another topic in this thread that's important and relevant.
So...I make $10 an hour, or like $25,000 or less a year, what do I do? How do I possibly save money? What do I do? You need to not worry about saving money, you need to worry about investing in your future to raise your income. Obviously I am not suggesting financial degeneracy, but let's be realistic, you can't support yourself on these types of incomes and save for the long term.
Saving money is for people who have livable incomes. If you have a barely livable income or not livable income, a better priority is to live with bare minimum amounts of saving, keep expenses to an absolute minimum and spend every extra cent you have investing in your future. You are a startup company, and startup companies do not spend time worrying about accruing cash on their balance sheet. Neither should you.
In general I think one of the flaws of the advice on these forums is there is a tendency to give advice on stretching the dollar over that of raising incomes. Which is understandable to a point, since it's easier to give that kind advice as it is less personalized.
But the core problem with penny pinching strategies on low incomes is most of those jobs are not scaling up with inflation and you are going to beat your head against the wall trying to figure out how to build a nest egg on such a slim margin. And even if you can do it this year, if your job isn't keeping up with the times or keeping up with inflation you are fighting an unwinnable war. Don't fight battles you are destined to lose.
Let's be clear: if you are making a minimum wage or close income...get out of this thread. Don't listen to the guy who makes triple your salary about how possible and easy it is for you to save money. He is the casino and you are playing blackjack against the house. You are going to lose. Work on being the casino, then come back to this thread. The advice will be much more pertinent, relevant and attainable.
Increasing income, and the ways in which it can be done, is very important. So is avoiding situations - like single parenthood, if possible - that are well known to be almost certain to result in poverty.
For someone who makes six figures to tell someone who makes 30-thousand -- or even say half that much -- that, "I save xx" could be seen as as coming from someone who can't relate to the issue, and so whose comment is absurd to even proffer.
The 2 situations are in no way comparable.
I started out making sub-$30K per year. In fact, I believe my first civilian job made only $26K per year, and I have a family of 4. Had a car payment, insurance, etc etc.
Saving is doable, but not quick, when you make that little. Saving 25% from that sort of pay in unrealistic.
However, on looking back, I did see numerous financial missteps on my part. And, I saw some financially wise moves as well.
It does boil down to a single thing: Spend less than you earn. Bottom line. If you are spending more than you earn, you will never get ahead.
Sounds trite, and on initial look it is. However, does one need cable TV? Do you need a TV at all? Do you use credit cards? Do you carry a balance? Can one take public transportation, in lieu of a car? Do you need a car at all?
If you have shaved it down to the bare minimums, then you need to increase your income. Second and third jobs, even.
Even after all this, you can't save anything from each paycheck, then you need to look at the bigger things: Should you consider moving to a place with a lower cost of living? Perhaps where you are living isn't right for you and your income.
I have found, most people who said they can not save, because they make too little still have a $200 cable bill, a $150 cell phone bill, a $500/month car payment, and live in a home that is far too large for them (Wasting money on the utilities to keep a place that is too large). A family of 4 does not need a 3000 sq ft home. Most families do not need 2 cars.
For someone who makes six figures to tell someone who makes 30-thousand -- or even say half that much -- that, "I save xx" could be seen as as coming from someone who can't relate to the issue, and so whose comment is absurd to even proffer.
The 2 situations are in no way comparable.
I thought this exactly. Even if he made JUST 100k and saved 25k this is just over what my gf makes in an entire year. Of course I work too. We make 46k combined....we save some money. Were frugal to a point and have started to save. Were not looking to save to the golden "6 months salary though. Do what we can.
Its like these people who say you need 5 mil + for retirement. I just tune them out.
For someone who makes six figures to tell someone who makes 30-thousand -- or even say half that much -- that, "I save xx" could be seen as as coming from someone who can't relate to the issue, and so whose comment is absurd to even proffer.
The 2 situations are in no way comparable.
I'm not talking about specific dollar amounts, I'm talking percentage wise. As income rises, one should be able to save a higher percentage of their income. I'm not saying someone who makes $30K or $40K/ year should save 25% of their income but I think at that salary range, it wouldn't be unreasonable to say that they SHOULD be able to save 10%. I think too many people have the mindset of "I CAN'T do this" and that very mindset rules their entire life.
I think too many people mistake "luxuries" for "necessities" in our country. For example:
Do you need a cell phone? I'd say YES, it's a necessity if it's your only line of communication.
Do you need a SMARTPHONE that costs $50 more each month? I'd say no, it's a luxury, not a necessity.
Do you need a reliable vehicle? Yes, it's necessary in almost any city.
Do you need a $15K vehicle with a payment? I'd say that's more of a luxury.
I guess I'm not interested in working until I die, I'd like to retire by 59 1/2 when I can start withdrawing from my ROTH IRA and supplement my retirement with land rent and eventually my pension plan. I think the social security system is going to fail or be drastically re-vamped with a retirement age set at 70. I think it's NECESSARY and PRUDENT to prepare for the future; not simply live each day as they come.
I think many folks saying you "need" $5M for retirement are talking about a proverbial place where only abject irresponsibility would result in running out of cash.
I'm not aiming for $5M. No way I'll ever get close to that. What I've read is that you can safely pull about 4%, but even that has detractors:
Incidentally, 4% of $5M is $200K. I could spent $200K a year, I suppose, if I tried really hard.
By the same token, 4% of $1M is $40K. I don't know if I could make a go of living on $40K, especially before Medicare kicks in. (There's a ten year age difference between us, so even if you split the difference in half, that still means one of us is going to be paying $13K+ for health insurance, for at least five years.)
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