5 financial tips that don't work for cash strapped households

The financial advice out there just doesn’t work for everybody. If you live in a financially strapped household, those “easy” money-saving tips just might not work. A few of the more common gems are laughable to someone who doesn’t have the luxury of dividing up their money the way the experts say you should.

If you’re struggling to figure out how to make ends meet, here are five pieces of financial advice you can toss out the window—and what to do instead.

1. Set aside 10% of your money in savings

When I was cash-strapped and working a minimum wage job, there was no chance of setting aside 10% of my income for savings. By the time taxes were taken out, I barely had enough to make rent and buy groceries.

Instead of a target percentage, consider other ways to set savings goals. If you have a dollar you can put in a jar each day, or you can transfer $5 to a savings account each week, that’s a start. Starting small helps you take positive steps you can feel good about. 

2. Max out your retirement account

What retirement account? This is a common financial savings tip, but it doesn’t make a lot of sense, since many households don’t even have access to a retirement account. The reality is that 90% of high earners have access to a workplace plan, but two-thirds of low earners don’t.

If you don’t have access to a plan at work but you want one, you can get your own. It’s as easy as opening a bank account online, and there are several options that you can open without any money.  

Maxing it out means contributing the maximum that the IRS allows for the year. Don’t worry about maxing it out. Just add money when you can. The important thing is to get in the habit. 

3. Cut back on spending

If you’re already cutting expenses to the bone, this advice is almost painful. When I didn’t have much in my bank account, I counted every penny. I was a budgeting ninja. There was no more “cutting back” to be had.

If you’re already operating lean, look into other alternatives that can have a similar result. There may be local resources to help reduce some of your bills. Take advantage of programs designed to help low income households pay utility bills and get out of debt on a low income, and food pantries that can lower grocery costs. 

4. Increase your income

When you can’t cut back, increasing income seems like the natural alternative. But what if you’re already working two jobs, you have kids to feed, and there isn’t one extra hour in your week to work another job or hustle your crafts on Etsy? Increasing income isn’t always practical. 

When you’re not in a position to make extra money, look for other ways to manage costs. Hunt down scholarships to cover the costs of your kids’ extracurricular activities. Rent out a room in your home. Use cashback apps for regular, planned purchases. This way, you get a little extra cash without the need to get another job. 

5. Move to a lower-cost of living area

When someone suggested this to me, I was shocked. Where would I get the money to make that move in the first place? It costs about $5,000 to move more than 1,000 miles. There was no way I could have done it during my financially-strapped days. Plus, I already had a support system in place where I lived.

It might be easier to figure out how to make your cost of living lower. Find out if friends or relatives can help with childcare if they live nearby. Get on the list for low-income housing vouchers to save money on rent. Take on a roommate to share living costs. Challenge yourself to get your bills as low as they can be. 

Get financial help if you need it

This is a piece of advice that actually does work. If your budget is strained to the point where you can’t keep up with your debt payments, get help. You can talk to a professional debt advisor about your options. If you have a financial hardship, you might be able to negotiate with creditors to resolve your debts for less than the full amount you owe.