Save more. “We have better savings this year because we’re watching what we spend,” says James, 43, a customer service representative at a telecommunications company in New York. Once his wife lost her job James began taking his lunch to work. “I looked at how much I was spending—that was a big problem. I could spend $8 for breakfast, and then spend more on snacks during breaks. Once you add in lunch, I was spending up to $20 a day—that’s $400 a month.” He brought his monthly spending down to $100 and also stopped driving to work to cut out the $12 per day parking and toll fees.
Ginita Wall, a CPA and co-founder of Women’s Institute for Financial Education, suggests eating takeout from your favorite restaurants instead of dining in, to avoid the drink bill and tip. “Two dollars or $5 a day goes far. If you invested $5 a day from age 22 to 65 you would have a million bucks, assuming 9% growth,” says Wall.
Secure additional sources of income. Four years ago the Houstons purchased a two-family home with the understanding that the rent from the second unit would make the mortgage manageable on one income, if need be. “Renting out the apartment is really what helped us,” says Pat, who receives $1,300 a month in rental income. In addition, she’s followed her passion and started her own company, Pat Houston Photography, something she never had time to pursue when she was employed full time. She expects to earn only about $5,000 from the business this year, but every little bit helps.
An expanded version of this article will appear in the November 2009 issue of Black Enterprise magazine.
Wealth For Life Principles
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrens’ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses
9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning
10. I Will Strengthen My Community Through Philanthropy