Strategies for Financial Success on a Very Small Income

Most of the articles I write for The Simple Dollar are targeting people who make somewhere in the ballpark of the average American income with some breathing room on either side of that. If I’m aiming at people who make between $35,000 and $150,000 a year, I’m covering advice that works for most of America.

That advice doesn’t cover everyone, however.

There are many people who struggle to get by on a lower income – sometimes a much lower income. Maybe they’ve become suddenly unemployed and are struggling to find work. Maybe they’re in an area where it’s very difficult to find a good job. Maybe a disability or another life requirement is restricting that person’s options.

Whatever the reason, not everyone is in a situation where they’re earning a strong annual income, and having a low income puts a certain restriction on people’s options. Advice like “cut out this daily $5 expense” or “cut back on your $100 a month cable bill” isn’t helpful because they can’t even afford those expenses in the first place.

I’ve been in that boat before. It’s not easy. I grew up in a household where only one parent worked outside the home, at a job that sometimes featured layoffs. We would survive for months at a time on the back of whatever my father might earn from side gigs. In college, I stretched my dollars so tight that eating a dollar menu fast food meal was an enormous and rare treat.

Today, I’m thankfully no longer in that boat, but I know many people in my local community are in that boat and millions of Americans struggle in poverty and near-poverty, too. Yet, that doesn’t exclude them from having financial goals and plans and dreams for the future.

Here are some of the best strategies I know of for people in that situation, people who have mined almost every frugal tactic and aren’t even in a situation where trimming down most expenses makes sense.

If you are eligible for assistance of any kind, take advantage of it. If you’re eligible to get SNAP benefits, take advantage of it. If you’re eligible for WIC benefits, take advantage of it. If you’re eligible to get food at your local food pantry, take advantage of it.

Do not let those benefits just sit on the table unused because you’re too “proud” to take advantage of them. Our nation and our local communities have put those resources aside so people in a difficult position can pick themselves up and move forward with the hope that you will move forward. Accept that help, and then pay it back when you’re in a better position.

This is perhaps the single most important advice that I have for anyone in a low income situation. See what programs you’re eligible for and take advantage of as many as you can.

Collaborate openly on bulk purchases with your friends. If you have a friend that has a warehouse club membership, collaborate with that friend on bulk purchases of items that you both use. Basic food items and household supplies are usually available at a great price per unit at warehouse clubs, but there are a few catches. For starters, those items come in sizable bulk, which means that the sticker price of the actual purchase can be high.

For example, you might be able to buy a box of spaghetti for $2 at the regular store, whereas at the warehouse club a bundle of six boxes is $9. Per box, the price is $1.50, but coming up with the $9 is hard. On the other hand, if you and two friends go together to buy that bundle, you’re spending $3 apiece on that bundle and getting two boxes of pasta, a much better deal than a single box for $2.

If you stick with the store brands at the warehouse club – Member’s Mark at Sam’s Club or Kirkland Signature at Costco – you’ll generally find a really good product at a great price per unit. If you can work with a friend or two to cut the investment in a bulk buy down, you can trim a lot off of your typical grocery bill.

What if no one has a membership? Consider splitting the cost of one and sharing that membership.

Collaborate with friends on tasks that would otherwise create an expense, like food preparation and child care. A tight circle of friends can be a huge money saver when money is tight. If you can work out plans together where you take turns having “dinner parties” where you prepare meals for each other (enabling the ingredients for a meal to perhaps be bought in bulk, saving some money, and creating a convenience for the other family) or take turns taking care of each other’s children so the other family can work (drastically cutting or eliminating child care costs), then you should take advantage of those things.

Move in this direction in a stepwise fashion, because each step will save money for you and for the other family. For example, is there an evening or two each week where one of your friends really struggles to get dinner on the table? Just create a standing invite for them to come to your house for dinner instead. If they want to repay you, look for a weekly evening where it would be helpful for you if they reciprocated and propose that idea. That system alone enables both families to turn an expensive meal option into a cheap meal option once a week.

If there’s a time in which you can watch a friend’s child while they’re working, don’t hesitate to do so. In return, ask for some regular child care during another part of the week or at another time when it’s really helpful for you. Again, it’s all about the collaboration – you’re both saving a lot on the cost of child care just by having a friend.

Look for any and all opportunities to carpool. If you and a friend both go to the grocery store that’s 10 miles away on Saturday afternoon, start going together and alternate who drives. If you and a friend work fairly close to each other, alternate driving to work when your shifts overlap. If you’re going downtown, text your friends and see if any of them are headed that way, too, and catch a ride together – you can drive sometimes, while at other times they might drive and you get a free ride.

Actively seek out these kinds of exchanges with all of your friends. The more opportunities you have for free child care, for free meals (repaid by just making one big meal when you otherwise would make a normal one), for free transportation, and so on adds up to a lot. Don’t be afraid to give a little more than you get, especially at first and especially if the giving is at minimal cost to you. You’ll find that most people are happy to reciprocate if you’re asking for things that are minimal cost to them.

Do the best possible job you can at work. I can’t stress this enough. You have to treat the job you have as though it’s not just a way to get a paycheck, but it’s also a stepping stone to something better because that’s exactly what it is. Every time you’re at work is an opportunity to learn a new skill, to impress your boss, to click with a customer, to be a natural leader in the workplace.

You don’t want to be working at your same low income job a few years down the road. The only way you’re going to climb up the ladder and either get promoted or move on to a better job is to demonstrate, through your actions at work, that you’re ready for that better job and that you have the skills for that better job.

You do that by not slacking off at work. You do that by finding things to do that need to be done and doing them without being told to do so. You do that by talking to your supervisor about what the concerns of the business are and doing what you can to alleviate those concerns. You do that by doing everything you can to be positive towards customers and make sure they have a great experience so they’ll come back (and they’ll think positively of both you and the business). You do that by taking advantage of every opportunity to formally learn a new skill or get a bit of education or take command of a project, all of which becomes great fodder for your next interview.

Every hour you spend at work isn’t just a little bit more for your paycheck. It’s a stepping stone to a much better job in the future. Treat it like that. Treat it as a gigantic opportunity to build the skills you need for a better paying job, even if it’s just moving from clerk to assistant manager or from waiter to shift manager. Do your job as well as you can, learn what you’ll need to know to do that better job, and be ready at all times for that call or that opportunity. Be patient – it will come.

The truth of the matter is that low income situations are difficult to escape from and the circumstances are different for everyone. The best thing you can do to improve your odds of getting on a better financial track are to take advantage of the benefits available to you, collaborate with friends and family to cut your spending as much as possible, and use your job (whatever it might be) as a stepping stone to a better job.

It won’t be easy, but nothing in life worth doing ever is. Good luck.

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Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.