Financial planning tips for those of us who aren’t billionaires

When you do a quick Google search, you are not really going to find financial planners willing to work with people who do not have piles of cash horded away.

And regardless of your socioeconomic status, you are told on a regular basis that you must save for the future. But how does one do that when one is below the poverty line or below the median income?

Everyone is aware of the wealth disparities in Hawaii between those who make a good income and everyone else who lives here.

We rely on tourism, which does little to bolster the average worker’s income and quality of life. And while the film and television industry is flourishing in Hawaii, few local residents are given the opportunity to gain above the line* employment on any of these productions. (*above the line jobs are directors, writers, producers and principle cast.)

So, if we are supposed to be saving for our future, how does one do this when that person’s income is below the median income, which is around $100,000 for a family of four, or below the poverty line, which is around $40,000 for a family of four.

With this in mind, KHON2.com decided to do a deep dive and find some tips for those of us who want to figure out a way to save a bit of money while also dealing with the epidemic of wage disparities with which we live.

Tips for at or below the median Hawaii income

1. Budget wisely: It’s important to create a budget that prioritizes essential expenses and to stick to it. You can easily utilize apps for budgeting or tools to track your spending.
2. Create an emergency fund: This is taking the time to build an emergency fund that can be used to cover unexpected expenses. Keep in mind that even small contributions can add up over time.
3. Explore how you can reduce expenses: This can be done by identifying areas where you can cut back. This can be as easy evaluating which subscription services you really need, comparing your options for dining out versus cooking at home or consumption of luxury items that will not contribute to your long-term financial planning.
4. Look into debt management: Debt is a reality that has existed since humans invented the concept of inanimate objects holding and signifying monetary value. But consumptive debt is something that has only plagued us for about 100 years. So, if you have debts, then focus on paying them down. You can begin by targeting any high-interest debts you may have. Of course, make every effort to avoid taking on new debt. You can work with creditors to consolidate debt or reevaluate debt.
5. Develop savings goals and schedules: This will take some planning, but setting up clear, achievable savings goals will help you visualize your long-term goals. Even saving a small percentage of your income regularly can be beneficial. For example: If you can afford to save $20 per day during the work week, then that’s $100 per week, $400-$500 per month, $5,200 per year. That’s $104,000 over 20 years.
6. Set up automatic savings: You can set up automatic transfers to a savings account to ensure you save consistently through your bank.
7. Look into wise investment and educate yourself: Do some research. If possible, consider low-risk investments like a retirement account, especially if your employer offers a matching contribution. Take the time to learn about personal finance, investing and savings strategies. There are a multitude of resources online and many are free.
8. Find and use discounts and deals: This may seem like a cliche, but looking for discounts, coupons and deals when making necessary purchases can help you save money and empower you to see savings where you didn’t notice them before.
9. Find government programs and tax breaks: Consult your tax preparer to take advantage of any government assistance programs or tax breaks for which you are eligible.
10. Explore community resources: Hawaii has a lot of non-profits. So, look into community resources like food banks, free educational programs and other local services to save money.
11. Live below your means: With the popular narrative “those who die with the most toys wins” has created a highly consumptive culture that pushes us to buy, buy, buy regardless of how much we don’t need products. Mostly, this narrative makes us miserable because we are constantly comparing what we have with someone who has more. Being able to adopt a lifestyle that is sustainable on your income can help you avoid the trap of lifestyle inflation and help us to build a life that makes us truly happy.
12. Healthcare costs: Unfortunately, because healthcare has become hijacked by those who want to make profit on our sickness, it is hard to avoid the inflation of healthcare costs. This has led many to become bankrupt and/or houseless with little to no help. Be proactive about your health. Learn about how processed foods interact with your body and pay attention to how you feel. This can help you avoid some big health issues that are not genetically induced. You can utilize clinics and preventive care services as well.

Tips for at or below the poverty line

Most of the tips above are applicable to those who are living below the poverty line. But there are some key differences that will make it more difficult to save money when your income is below the poverty line.

1. Prioritize needs over wants: This is similar to number 11 above. However, in a situation where there is no money aside from essentials, it can be difficult to conceptualize saving money. Focus on essential expenses like food, housing and healthcare and limit spending on non-essential items.
2. Save small amounts: Even if it’s a very small amount, regularly setting aside a bit of money can add up over time. For example: If you can afford to save $5 per day during the work week, then that’s $25 per week, $00-$125 per month, $13,000 per year. That’s $26,000 over 20 years. Consider opening a savings account if you don’t already have one.
3. Energy efficiency: Being able to reduce utility bills by conserving energy can save money. Simple actions like turning off lights when not in use or using energy-efficient bulbs can help.
4. Buy secondhand: Buying secondhand is actually something that everyone can do since it is a great way to subvert the consumption cycle. So, when you need to purchase something, consider buying secondhand to save money.
5. Plan for emergencies: this one is related to number 2. Try to build a small emergency fund. Even a small buffer can help in unexpected situations, preventing the need for high-interest loans.

Keep in mind that these are merely suggestions to help you begin to develop your own approach to planning for the future. Once you feel empowered to take control of your life, then you have so many more options than when we are trapped by the status quo.