CLEVELAND — In a good year, studies show that nearly 70% of Americans have less than $1,000 in savings.
With COVID-19 driving unemployment rates to historic highs, many are barely making ends meet. That's why, 3News Consumer Reporter Danielle Serino looked into how to save, even while living paycheck to paycheck.
Not talking about the obvious ways of using cash instead of credit, eating in instead of out, or negotiating the price of monthly services.
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Most of us, including 3News viewer Rochelle Kocher who admits to only having a few hundred dollars in her account, know you should follow those steps if you need more cash.
Still, she explained, “I do live paycheck to paycheck, which is really hard at times. And it's hard to save when you have bills.”
Rochelle's income dropped unexpectedly after losing a housemate. But like many, choosing between what she needs and what she wants is not so easy.
It's why we called on two financial experts to help.
Dennis Pellegrini, a Chartered Financial Consultant with Peak Brokerage Services, explained, “You have to change what you're doing. That definition of insanity, is doing the same thing over and over again, expecting a different result.”
Bobbi Rebell, a personal finance expert with Tally, an app that helps people reduce their debt, told Rochelle, "There's two areas to focus on. The first one is the mindset. And the second one is the specific things that you can do in terms of the mindset.”
So, for starters, anyone living paycheck to paycheck should sign up with a roundup savings app. They round up what you spend on a credit or debit card to the nearest dollar, and send that money to a creditor, savings, or investment account.
Rebell says, “Without even feeling it, you will save money. I save hundreds of dollars every year just in this roundup."
Another way to bridge that gap? Sell your stuff…not just electronics, clothing, or household items.
But you can sell things like your hair, for cancer patients or other people suffering from illness-related hair loss. Depending on the length and type of hair you have, you could make $100, if not $1,000 dollars. You could also donate plasma. That will net you $50 to $75 dollars a pop.
Many people make extra cash by taking on a side hustle. In fact, 45% of people working 9-5 now have a side gig.
Serino explained to Rochelle that, "they're part-time gigs, so you can decide how much time you want to spend with them. And that's just additional money that's coming into your household."
If you have a full-time job, you should look for freebies on your company's HR page.
At Amazon, where Rochelle works, they pay 95% of the costs for school if someone wants to get a degree or certification. So, Rochelle's thinking about going to school to become a nurse.
Another perk at most big companies is a 401K plan. Many will match your contribution. And no matter how little you put in, your cash will typically grow 8-10 percent.
Then there are Health Savings Accounts, which Rochelle could have used since she had surgery last month. HSA’s let you set aside money, pre-tax, to pay for medical or drug costs.
According to Rebell, “The really great thing about an HSA is that you don't have to use it all in one year. So, if you have a really healthy year, you can roll that money over and it's all going to be tax-deductible.
But, if you "really" want to make your money work for you, any financial expert will tell you that you need clear goals.
Rochelle told 3News she’d like to eventually buy a house.
To achieve those goals, Pellegrini says, “We have to change the way we think. We have to change the way we do things. You have to take those steps. And one of those steps is to write those goals down on paper, look at them regularly and share them with the correct people. Somebody can become your accountability partner.
A great person to start with is a financial counselor. There are plenty of places to get free or lost cost help, and it doesn't matter how little you make. You just have to put that fear aside of facing your finances and take a leap.
Need more advice? Check out these helpful resources: