Hourly workers face a particular set of challenges when it comes to saving money and increasing their income. Fluctuations in the number of hours worked and lack of benefits can make budgeting more difficult for these workers.
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Meanwhile, it’s no wonder that 62% of hourly workers say they plan to quit their job in 2023, citing inadequate benefits as the top reason, according to a study by Legion.
To put this into context, the federal minimum wage in the United States is $7.25 an hour, but minimum wages vary by state. As of Sept. 1, the District of Columbia had the highest minimum wage in the nation at $17 an hour, followed by Washington state at $15.74, according to the Department of Labor.
Experts say there are steps hourly workers can take to ensure not only economic growth but also a healthy future.
create a budget
This is easier said than done since hourly workers’ incomes can vary from week to week or month to month.
But some experts say understanding where every dollar of your wages goes is paramount to success.
“To track your spending, use a budgeting app or a simple spreadsheet. This can help you identify areas where you can cut back and save even more,” says Taylor Kovar, CFP. money couple and Kobar Wealth Management.
Kovar also recommended putting a portion of your income into savings as soon as you receive your paycheck.
“Treat savings like a non-negotiable expense,” he added.
Other experts agreed, saying that while it may not be exciting, it is the best way to increase financial literacy.
According to President Kyle Enright, achieve financingStart by setting your financial and lifestyle goals, with your spouse and family if appropriate.
“Once you’ve identified your goals, create a budget that aligns with them using your favorite tool, whether it’s an app, spreadsheet, or paper and pencil,” he said.
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Make getting out of debt a priority
This is important because if you have credit card debt, you could end up paying more than the purchase price of the item you purchased if your monthly payment balance is less than the full amount.
“For example, if you had $3,000 in credit card debt at an 18% interest rate, and your minimum payment was only 3%, that would be $90 a month,” Enright said, adding that you would end up paying just the interest. It added that it will cost about $2,700 and will take almost 16 years to pay off.
“The total interest and principal (the amount originally charged) will be approximately twice the amount originally charged.”
pay on time
Along the same lines, Enright says that paying on time is the best personal finance skill to have if you want to grow your money, as it saves you money on interest and late fees, and allows you to use it for savings and financing. I mentioned it as one of my habits. wealth.
“It’s also the single best way to maintain a good credit score. It has a variety of benefits, from improving your ability to get future loans to lowering your car insurance premiums and even re-employment. There is,” he said.
Be prepared for insurance
Another tip is don’t forget your insurance.
“When you’re faced with a disaster, whether it’s a car accident, a fire or theft in your home, or a job loss, the last thing you want to do is face mounting debt while dealing with the problem,” Enright said.
Everyone needs basic health insurance, whether or not their employer covers it.
“You also need vehicle insurance, homeowners insurance and renters insurance,” he said. “And ideally you also need disability insurance. If you have a family or other dependents, life insurance becomes very important.”
calculate net worth
Simply put, net worth is the total value of your assets minus your liabilities.
Understanding the meaning of net worth and where you stand may help you strengthen your finances.
To make your decision, Enright said, list your assets and include the value of your home, retirement funds, savings accounts, stocks and bonds, jewelry and cars. Next, subtract your debts and include your mortgage, student loans, car loan, and credit card debt.
“If you have a negative net worth, you need to reconsider your expenses and income,” he says. “Review your net worth every year to see how you’re progressing.”
Improve your skills without spending money
“Knowledge is power, and it doesn’t always come with a price tag,” says personal finance expert Shavon Roman. heal plan investment.
Roman suggested strengthening your brain with free resources at your local community college or online courses at Harvard University.
“Every time you learn a new skill, you not only become smarter, but you become more marketable,” Roman said.
Open a high-yield savings account
Personal finance and debt expert erika.com.
“There’s no reason not to open a high-yield savings account to grow your savings faster, and often for free,” she says. “Many high-yield savings accounts can be found at online banks and have no monthly maintenance fees.”
side noise
Roman also suggested considering side hustle economics as a financial tool rather than just extra cash.
It can not only increase income but also open the door to tax deductions and deductions, she added. “A side hustle can be more than just a job. It’s a financial power move.”
Finally, Roman argued that working an hourly job could be the catalyst to becoming a millionaire with the right strategy.
“It takes time, but with proper planning and timing, hourly workers can achieve a secure life full of happiness and financial peace,” she said. .
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