Managing money when you live paycheck to paycheck

  • Nate Hoskin is one of the nation’s youngest certified financial planners.
  • By day, he works with an organization that offers financial advice to low-income workers.
  • Hoskin said any financial planning at this level requires non-traditional methods and every dollar counts.

At just 24 years old, Nate Hoskin is one of the youngest certified financial planners in the country. He is currently working on setting up his own company, Hoskin Capital, and has over 200,000 followers on TikTok, where he primarily covers financial literacy topics to an audience of mostly people under the age of 30.

However, in his 9-5 day job, Hoskin works for Brightside Benefit – a financial services company with a mission to improve the financial health of working-class families and people who live paycheck to paycheck. pay. most likely to be excluded from traditional financial services products.

“Technically, I’m not a financial advisor at Brightside — I’m an assistant and an educator,” Hoskin said. “People can talk to me for free, just ask me questions, and I can educate them and provide them with the information they need.”

Hoskin said his clients are largely employees of Fortune 500 companies, but many of the people he talks to through Brightside are employees in those companies’ lower pay bracket, at salary. minimum.

“As a byproduct of this role, I ended up working with people at the absolute lowest levels of economic status,” Hoskin said. “I work with people who make $17,000 or $18,000 a year who work in Amazon fulfillment centers.”

Hoskin said this line of work brought him into contact with many different groups that all try to help people who are struggling financially, such as religious charities and homeless shelters.

He said that while not the traditional clientele that financial planners typically work with, he finds his day job very rewarding and fulfilling. In a previous role, Hoskin worked for a quantitative hedge fund and rubbed shoulders with multi-millionaires, which he said he didn’t enjoy.

“The reason I was put on this earth is to help people who traditionally don’t have access to financial advice,” Hoskin said. “This is reserved because unfortunately it’s not very profitable for someone like me to offer these services to someone who won’t pay me at least $10,000 a year or something like that.”

Hoskin said he realized that ultimately this control of knowledge can only change if there are financial advisers who are willing to work with low-income clients and give up on maximizing their own income.

“It costs next to nothing to fund my lifestyle. I’m no stranger to working 12 or 13 hour days,” Hoskin said. “Why don’t I dedicate myself to something that can help a whole lot of people?”

Hoskin said for people in the lowest tax brackets, managing money is very different than for others with higher disposable income. When asked what he would like others to know about his work and the wealth of low-income people, he said there were two things.

Money management at this level should be non-traditional

Hoskin said when you live paycheck to paycheck and your issues include things like not having enough money to take care of your kids or keep yourself from being evicted, things like budget 50-30-20 will not work.

He said for many people, well over 50% of their monthly income has to be used for non-recurring and necessary expenses – and that includes a lot of cuts to get there.

“I’ve given people loans with 25% interest rates,” Hoskin said. “The mere thought, at the start of this job, that I would give someone who is currently about to be evicted a loan with an interest rate of 25% shook me to my core.”

But that said, after spending some time in his current role at Brightside, he realized that these loans allow people to stay in their homes and help them pay for childcare while continuing to work on their health. financial.

When asked why Brightside’s loan rates were so high, Hoskin said they were loans with no credit checks and the interest rate was due to the high rate of default on loans. loans. These loans also prevent its customers from turning to worse options, such as going to predatory lenders such as payday loan shops, where interest rates are usually closer to 100% to 150% interest.

“I’ve seen it with 400% interest,” Hoskin said. “We really are an alternative to the payday shop. It’s still not pretty, but it’s $140 in interest on a $1,000 loan instead of spending the rest of your life racking up debt. “

He added, however, that he usually opts for the loan offer route as a last resort. Hoskin said the first line of defense for people in financial crisis are charities and loans from friends and family.

“I call churches first and see if they have a parishioner or something that can donate $300 to charity or something,” Hoskin said, adding that GoFundMe is also something who has been successful in raising funds for clients – particularly for amounts around $1,500 or less.

“People are ready to be really nice, and I think that’s really cool,” Hoskin said. “It’s a shame we’re really working on this because our main focus is on working on their financial security – not dealing with financial emergencies – but it’s a lot of people we’ve worked with.”

As for state-funded aid, Hoskin is less optimistic and said it often isn’t helpful in his line of work.

“Government assistance programs are unfortunately some of the most inefficient things I’ve interacted with,” Hoskin said.

Although there are programs like Medicaid, SNAP, and CHIP, many critics have pointed out that red tape, means tests, and lack of available funds have caused these programs to miss out on many low-income people who might be helped. cracks.

Any increase in income to this level is absolutely life changing

The second thing Hoskin wants people to know about low-income people’s money is that any increase in their income, no matter how small, can be life-changing for someone working for minimum wage.

“A lot of the work I’ve done with [my clients] isn’t necessarily teaching them how to save money, because they don’t have money to save,” Hoskin said. “It’s about teaching them how to build a plan to increase their income.

Hoskin said that sometimes means doing a side job like Uber, or creating a plan to find a better paying role elsewhere.

“I asked someone to quit their job at a distribution center and go work at a gas station because it paid $2 more an hour,” Hoskin said, as a example. “I didn’t feel like I had really prepared her to start planning for retirement and contributing to her 401(k) — but it meant she could feed her child every month.”

Hoskin said he thinks focusing your attention on increasing your income as your primary financial goal is something that applies to everyone until they start earning 6 figures.

“You never really increase your fixed costs,” Hoskin said. “I’m not an expensive human. And so every time I increase my income, I increase my savings and my ability to have really cool experiences. So I really think that’s the number one priority.”

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