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How Do You Save For Retirement If You Barely Make Enough To Live On?

31 August 2006

That’s what this Yahoo Finance article discusses. It’s a very difficult question to answer, because if you don’t make that much money, there’s not much left to squeeze out of the budget in the form of savings. The best advice is probably here:

The other side of the equation is to increase income. Take a second job, or a third. Don’t think of it as forever, just until you can get the credit card balances down and build a bit of a cash cushion. If your wife doesn’t work, perhaps she should. Bankrate’s “Should my spouse work, too?” calculator will help with that math.

Frugality helps some. With certain people, it is THE solution because the problem they have is spending much more than they earn on frivolous stuff they don’t need. But for some people, you might have to try to find another way to make some extra money. If you’ve got lots of credit cards it’s easier because eventually you can reduce your monthly expenses once you pay those off.

If you have no debt and you’re still struggling to keep your head above water, then you need to be thinking about where you’re going to be in your job in five years or so. Moving from a low-paying job to a higher paying one will make all the difference in the world – and you might have to go back to school to do that.

The other option is to start a business. But some people aren’t inclined to do this, and many others will fail just because it’s so hard to do successfully.

Finally, one drastic solution many people never seem to consider is moving cities. I’m sort of suprised how rare this is – but if you’re a low income family, the reality is you’re better off living in a semi-rural area than in a city. If you live in New York City, and you’re making 30,000 a year – well, there’s your problem. Most people could make very similar salaries if they’d go out to Kansas or someplace, live in a bigger house, and suddenly have a lot more money available. I know it stinks to be told that you can’t live where you want. But the reality is that you can’t live where you want and expect to have the┬ádisposable income you want. In most cases, you get to choose between the two. The couple thousand it costs to move could be the best money you ever spent.

Discuss this in the Free the Drones Personal Finance Forums.

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    One Response to “How Do You Save For Retirement If You Barely Make Enough To Live On?”

  1. » Weekly Blog Round-Up on Consumerism Commentary: A Personal Finance Blog Says:

    [...] 2million has two posts about purchasing an engagement ring. Free the Drones wonders how to save for retirement if you barely make enough to live on. [...]