As grocery prices climb, rent surges and inflation chips away at every dollar, many Houstonians may be struggling to make ends meet. Some may even be asking: How can I make my paycheck go further?
Experts say the answer lies in being intentional, resourceful and realistic.
Build a detailed, realistic budget
“Most people, when they say, ‘I have a budget,’ write down their list of bills,” said Desmond Johnson, financial advisor at Edward Jones. “Where most people fail in creating their budget is to actually do something specific and detailed that they can actually follow.”
Johnson urges Houstonians to track not just fixed expenses like utilities, but also daily indulgences that quietly drain funds.
Thinking something is “just $5” several times a week might add up to hundreds of dollars at the end of the month.
“There can be a big hole in what you think you’re spending versus what you’re actually spending,” he said.
Instead, Johnson recommends using one’s net income, the money you actually take home after taxes and deductions, as the foundation of your financial planning.
Use free community resources
Some suggest tapping into the wealth of Houston’s local support available.
“A lot of nonprofits offer support, whether it is with groceries like the Houston Food Bank or Wesley Community Center’s savings clubs and United Way’s 2-1-1 helpline,” said Sabrina Lewis, Houston Money Week’s chair and executive director. “These free resources can help you remove some costs so that it doesn’t impact you as heavily.”
Master the art of debt management
To manage debt without hurting your credit score, Lewis advises against payday loans and apps that give early access to paychecks with hidden fees.
“Call those creditors, see what you can do to reduce the payment,” she said. “You would be surprised how much they’re really willing to help you.”
For those juggling multiple debts, Lewis suggests the “snowball method, or paying off the smallest debts first while making minimum payments on the rest, which can provide motivation and progress. On the flip side, one can choose to look at his debt and check which one has the highest interest rate and work on paying that one off first to reduce the overall debt.
Save first, even if it’s just $10
Even with a tight paycheck, both Lewis and Johnson agree that saving even a little is non-negotiable.
“Your finances are a zero-sum game,” Johnson said. “Let’s say you do not earn more. You have to find that money somewhere within what you’re already spending.”
Also, make sure you are rewarding yourself before pushing yourself to achieve the next goal. “Don’t throw yourself a $100 celebration party…maybe buy yourself a $10 Slurpee,” he said.
Spend only on what you can’t live without
Dr. Ethiopia Keleta, a professor of Economics at Texas Southern University, stresses the importance of building an emergency fund, especially for underserved communities. She urged them to do a cost-benefit analysis of their expenses, focus on necessities like food, shelter and medicine. She also encourages reducing non-essential spending like eating out, brand-name products, or beauty items.
Keleta suggested keeping a three-month spending log to pinpoint where cuts can be made, especially during an inflationary period.
She assured that economies do not always become persistently inflationary.
“Over time, it’s going to change because people’s behavior is going to change. We are going to drive fewer miles, look for alternatives like carpooling, or grow our own vegetables,” she said. “Businesses are going to notice this because they’re going to lose customers. Eventually, this inflationary pressure will change.”
Invest in yourself, not just your savings account
Beyond budgeting and saving, Lewis encourages Houstonians to learn about tools like high-yield savings accounts (HYSAs), health savings accounts (HSAs) and flexible spending accounts (FSAs), especially those tied to employer benefits.
“Understanding exactly what those benefits are, those dollars that you can allocate pre-tax to bring down not only just your tax liability, but allow you to use funds on medical expenses,” Lewis said.
She also emphasized side hustles as a viable way to increase income and stretch dollars.
Johnson echoed this advice and urged people to invest their dollars.
“Even the money sitting in the bank is losing money because it’s not keeping up with inflation,” he explained. “Investing is not an option to make sure that you don’t lose money or try to gain money, but it’s actually necessary in order for your money to at least keep pace with inflation.”
Plan ahead
Johnson said people are short-sighted about the potential of their paychecks and do not invest regularly, while spending money on “fun.”
“There’s nothing necessarily wrong with either of those methods, but when you sit down and try to make a plan for your money, it forces you to think about more than just immediate fun, or retail therapy,” Johnson said.
He also urges the Black community to think of wealth generationally.
“Maybe you start putting things together for your children, but you teach them now what you’re doing, how you’re doing it, why it should be done and why they should continue,” he said. “Maybe you could be the first person in your family to start the change… plant the seed.”
