Financial freedom should be a top priority for people of color. The institutional and systemic barriers we've faced for hundreds of years resulted in less ownership compared to our white counterparts.
The institutional and systemic barriers that have been in place for hundreds of years to hold us back is the main reason why Black people own less of this country compared to our counterparts. Being financially fit is certainly a form of freedom that we can use to uplift and invest in our communities. Let’s face it, living paycheck to paycheck is hardly what we went to college for, and having the funds to truly live is liberating.
Millennials are facing different economic times than past generations; college tuition is at an all-time high, the cost of living is rising all over the country and the job market and salaries aren’t reflecting those changes. We live in a time where the majority of parents are still carrying their adult children financially, and grads are moving back home for longer than just a few months. The National Financial Capability Study shows that two-thirds of millennials have at least one source of long-term debt and 30% have more than one - and those are just the college-educated millennials.
If you’re not interested in being helped by family in these harsh economic weathers, here are some things you can do to get financially fit and truly become independent.
Have an emergency fund. An emergency fund isn’t the $100 cash you keep in your car in case you of a “we don’t accept credit cards” crisis. A true emergency fund is at least six months’ worth of savings that will hold you down in case you ever got laid off, or something along those lines where you’d have no income.
Pay off debts faster. Being financially free means you don’t owe anyone anything. Being debt-free is what everyone aspires to be, then you’re only paying your actual bills – not for your degree, car, etc. Most debtors don’t care if you lost your job, got hurt or things are a little tight this month. Make the necessary sacrifices to pay off any debts you have sooner than expected.
Save 10% of every source of income. Saving more is great, but you need to be at the very least saving 10% of every check you get. Don’t save what you have left after spending, spend what’s left over from saving. The Millionaire Next Door is a great book to read for those who are trying to find financial independence.
Take steps to build good credit. If you have good credit, you can have anything you want. Your credit score is more important than your degree, where you went to college or and how much you make.
People don’t have nice things because they have money to blow, they have nice things because they have good credit.
Don’t equate someone’s income to the material things they possess. Start small, just by paying a little more each month on your credit card or even paying bills early rather than just on time. It matters. Also, you should only be using 30% of your credit line when it comes to credit cards. Unless you pay in full each month, maxing out is never a good idea.
Start investing. There are lots of apps that you can download to help you get started investing. Commit yourself to invest a certain amount of money and just watch it grow over the years. Sort term investing isn’t going to get you the financial freedom you seek. App such as Acorns or Stash help educate you on where your coins are going and also use your purchases to add money to your portfolio.
Own something, eventually. Workers can be rich, but owners are wealthy. Don’t waste your time only working for someone else. Own something that can bring you real money one day, even if it isn’t a traditional small business. And even if you don’t want to run your own business, you can certainly hire someone else to do it while you reap the benefits of being a business owner.
Keep a detailed budget spreadsheet. Dust off your excel skills and make a detailed spreadsheet of every dime that comes in and leaves your accounts. This will ensure that you aren’t spending more than you’re making, and you’re on track to reach your goals.
Try to make residual income. This can be hard for those of you who aren’t interested in being entrepreneurs but there are ways around flat out starting a blog or business. You can invest in real estate that allows you to get paid as developments are sold, invest in companies that give dividends or sell digital products online. Being financially independent means working harder and smarter.
What steps are you taking to be financially free?