The Gap: Financial knowledge for those making $40,000-$60,000
If you live in Wichita and make money in that range, you know the challenges that come with it.
The Gap: “Good Money. That is subjective.”
There are a large number of people that make between $40K and $60K per year. People right out of school, single parents and individuals on a fixed income come top of mind.
At face value, that figure sounds like enough money, but when you are looking at home ownership, car loans, paying down debt and considering the current cost of living, living in the gap becomes challenging.
There are many resources for people making less than $40K, especially anyone in crisis. Someone facing eviction or going hungry should call United Way 211 Information and Referral right away and see what resources can help.
Once you start to reach the $40K income threshold, government resources start to lower.
So what is out there?
There are experts in our community, trained to help with people with finances. For those in the gap, there are some best practices.
“You aren’t exactly in crisis but you don’t make enough to get ahead,” said Michelle Presnell, United Way of the Plains Community Impact Manager for Financial Stability.
Michelle worked in the banking industry for 13 years, dealing with loans, savings accounts, debt analysis and small businesses.
“I fell into the gap. I loved what I did, but I still lived in the gap. I have been fortunate to always have a great job but between debt I incurred in my early twenties and adjusting to be a single mother, it was challenging. It’s not understatement to say I struggled for many years,” she shared. “We have gone through a crazy last couple of years and our financial landscape continues to change in this country…knowing that things are going to change and how to adjust to those changes is a big piece of financial stability.”
She has six tips that she recommends people keep in their financial toolbelt, especially for people who fall in the gap. “There is no magic wand, but knowing your tools can help you achieve financial stability. You have to be very purposeful with how you reach financial stability in that gap.”
Be honest with your budget. This is the hardest thing.
What is coming in and what is going out? This is the first step in your budget and you need to be very detailed with your number crunching.
Needs versus wants are always hard to decide. That is where a credit counselor can come in, and there are free services for people in the gap. They can help you make a plan, or as Michelle say, a forecast.
“Compare a budget to a forecast. You would like to know where you want to go for your financial future so you need to set your goals for now so you can be prepared for what may come next. You cannot do not know what is going on within your actual finances. Decide what is a need and a want, and being to cut the things out that are unnecessary or extra.”
When you begin truly budgeting, you should start with small, achievable goals. Clipping coupons, prescription discount programs and cutting back on some of your more obvious wants is a great place to start
“There are a lot of ways to save money, so start to save little bits to make you more financially stable for the future.”
If you are looking for a bigger goal, work on building six months of income in your savings account for an emergency. Take into consideration insurance deductibles, major repairs to a vehicle or home, and any future expenses you know are coming up.
How do you contribute to your future when you are trying to get by today? When it comes to putting money into your retirement, aim to put in the employer match.
“You are leaving money on the table if you don’t. Think of it as an instant raise if they are going to match your money.”
Michelle shared that studies and research are revealing that people nearing retirement now often do not have enough money to live on, and these people wished they invested in their retirement more.
If this is you, now is the time to sit down with your advisor and take a serious look at your retirement plan because avoiding it is not going to change it.
The final word of advice is to start planning for your retirement now.
3. Flex Benefits and HSAs (Health Savings Accounts)
“When you have kids or dependents, you never know when they are going to get an ear infection or break a bone. This can go for people without kids, consider when you might get sick. If we learned anything in the last few years, health is a fragile thing that we need to take care of.”
Utilizing your employer’s flex benefit or looking into a HAS is a way to have tax-sheltered medical savings, Michelle says.
If you have an expensive prescription or medical cost that must be paid every month, budget that money into your flex benefit or HSA.
Check with your employer, insurance provider or local financial institution to explore your options. There are many types of medical savings tools, so educating yourself on what your company offers, what is best for you and the potential savings isn’t only important, but also subjective towards your needs.
The average parent will spend $13,000 on infant childcare in the state of Kansas.
Making that figure even more troublesome, finding available childcare at all has difficulties.
Michelle says that if you need help with childcare, you should call 2-1-1.
Additionally, there recently was a cycle of funding for an area in Wichita identified as high need; the 67214 ZIP code. The Wichita Collective Impact (WCI) has made investments in this area and is working with programs to assist in the summer enrichment and care of youth. You can contact 211 or our website to see which programs are partners on this initiative.
“It feels incredibly unfair to not give kids a chance to have somebody look after them and engage with them,” Michelle said. “We cannot discount the parents because they have to go to work. You have to go to work to be able to feed your kids and meet their needs.”
5. Community Gardening/Coupon Clipping
Not gone are the days of clipping coupons, but you will find a lot more opportunity with digital savings.
Many grocery stores offer promotions that you can get through email or on their website that can lead to cost savings. Michelle recommends that you do some research on your favorite store and see if they ever have any of these digital coupons.
“I know that that seems really small, but it can save you money. When you’re in the gap, every little bit counts.”
It also can help with budgeting. By finding good deals on the items you need, it can reduce the temptation in the store to pick up stuff you don’t. Michelle suggests making a meal plan and grocery list, and sticking to it.
One other great option for reducing the cost of food is using a community garden. These also have the perks of being environmentally friendly.
These gardens can be ran by your neighbors or non-profits in the community. They usually use a form of sweat equity, where you contribute to the garden and share the reward.
Call 211 or explore what is out there on social media when it comes to community gardens.
6. Average Utilities
The summer months bring high electricity bills and the winter brings high gas bills. The cost of climate control isn’t always cheap. Michelle says for people looking to reign in their spending, consider utilizing averaging programs for your utility bills.
“If you are wanting to get a better handle on your budget, look at the average payment plans.”
These programs commonly look at your energy usage over the past 12 months, and create a monthly payment that averages the cost. This means you won’t see low utility bills in the off-season but you won’t see high fluctuating utility bills when your HVAC system is working hard.
If you are already behind and facing a shutoff, dial 2-1-1 to seek assistance.
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