LIHU‘E — It can be hard living in paradise.
Hawai‘i is the worst U.S. state to live in for saving money, according to a recent Forbes Advisor analysis.
The analysis, released earlier this month, focused on four categories: income and debt, cost of living, taxes and housing. While Hawai‘i scored poorly across all four categories, the analysis emphasizes Hawai‘i’s 184.0 cost of living — by far the nation’s highest.
Chanel Josiah, Kaua‘i program manager at housing counseling agency Hawaiian Community Assets, emphasized the high cost of food as a significant factor in creating harsh financial situations for residents.
“The families that we work with, that’s the highest expense that people have,” she said. “Whether they’re receiving supplemental assistance or not, that’s still coming out of their pockets … they’re needing to spend above whatever their SNAP (Supplemental Nutrition Assistance Program, formerly food stamps) benefits might be.”
According to the U.S. Census Bureau’s most recent Household Pulse Survey, Hawai‘i ranks eighth highest for food security, as 13.1 percent of households reported “sometimes” or “often” not having enough to eat in the last seven days.
Additionally, the Forbes Advisor analysis found that Hawai‘i residents spend an average 24.96 percent of income on housing — the second-highest rate in the country.
“Paying a large amount of money to housing is going to eat up anything that you’d be able to save,” Josiah said.
The analysis also found that Hawaiʻi holds the nation’s highest debt-to-income ratio, at 2.25, meaning Hawaiʻi households maintain over twice as much debt as they receive in earnings.
“More debt than income and attempting to manage higher costs of living can eat up any other funds someone may have had to put aside for savings,” said Forbes Advisor Digital Public Relations Manager Nadia Gonzalez.
Even though the financial conditions of Hawai‘i can make it difficult for residents to save money, Gonzalez stresses that it isn’t impossible.
Gonzalez recommends cutting expenses where possible. Because fixed expenses like mortgages, rent and car payments are tough to lower without refinancing or moving, she suggests focusing on cutting unnecessary variable expenses.
“Residents can examine things like their phone bills, insurance costs, entertainment output and the like, to see where they can negotiate a lower cost, thereby putting more money back into their pockets.”
Gonzalez also recommends prospective savers focus on reducing debt. While current high interest rates may make it difficult to refinance homes or cars, Gonzalez said options still exist for managing credit card debt.
“If possible, a balance transfer to a credit card offering 0 percent APR for a period of time can help a person pay down the debt faster,” she said. “If another credit card isn’t an option, paying more than the minimum payment is a good way to get ahead.”
Finally, Gonzalez suggests opening a high-yield savings account to take advantage of current high interest rates.
“Even if Hawai‘i residents have to start with small deposits, small sums can make a big difference,” she said. “Over time, the interest will help that money grow.”
Jackson Healy, reporter, can be reached at 808-647-4966 or email@example.com.
Source: The Garden Island
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