Creating a healthy financial life can often feel like a balancing act as we try to get past the point where we are living paycheck to paycheck and begin to build wealth. While ‘throwing more money at the problem’ may feel like the solution, the reality is that more income does not always translate into financial security. A survey by Sun Trust shows that nearly a third of American households earning $75,000 a year live paycheck to paycheck at least some of the time.
When it comes to finding our financial balance, the scales are heavily weighted against Black women. A survey by The Washington Post and the Kaiser Family Foundation found that Black women have a harder time getting loans and paying bills than other groups.
This is not ‘breaking news.’ We all know that Black women are on the losing side of socioeconomics. They are at the bottom of the pay gap, making 64 cents for every dollar that White men make, and 70% of Black women are trying to raise children on their own.
While battling these factors would cause many to try and cut back on their financial obligations, Black women step up and put the needs of others ahead of their own.
Research from Prudential’s African American Financial Experience survey finds that Black women are more likely than the overall population to take financial responsibility for loved ones.
The fact of the matter is, Black women should applaud themselves for their ability to take on and carry the heavy financial burdens they do. They won’t shy away from them. There are, however, some things we can do to make sure that our own financial houses are in better shape so that we are in a stronger position to provide emotional and financial support to others and ourselves.
Alice Barnes, a financial professional from Prudential, says there are three things Black women must do in order to create financial security:
- Create a savings plan: Begin with a budget – identify your income and your fixed and variable expenses. “This will allow you to determine the disposable income you can put away each month,” says Barnes. She says places will crop up where you can save more by eliminating expenses like “that extra cup of coffee or that new handbag.” “In order to create wealth, you have to start small. That means putting aside something to pay yourself first. Once you’re able to pay yourself first, you have options available to grow that money.”
- Eliminate credit card debt: Barnes suggests taking the card that has the highest interest rate and finance charges and paying more than the minimum on it each month until it is paid off. That will eventually free up money to pay off the next card.
- Get more out of your money: Investigate investment options like mutual funds, stocks, and bonds as alternatives to the traditional savings bank. You can find out more about mutual funds on sites like Morningstar and Google Finance. Barnes also recommends seeking out professional financial advice.
In addition to Barnes tips, make sure that you’re not being an ‘enabler’ to loved ones in financial need. If someone you care about needs financial help, and is unwilling to talk about living beyond their means and create a budget, you are enabling bad habits. Also, always consider your own financial situation before you extend help to others. Make them understand that if you get into financial trouble, everybody loses.