You Have Power Over Your Money

Hello Everyone! Today I want to talk about money issues. Most of us feel that we have too little money and those of us who do have sufficient income are often failing to invest our CAPITAL in ways that will provide long-term growth and financial security. Let's talk about some basic financial issues we must address as black women.

1. Most of us are single women (55% of black women never marry) and many of us are single women with children. This makes a big difference in the area of finances. When you're single, you don't have the income of another person to fall back on when things go wrong this is why we have to plan for the worse.

2. Save. Pay yourself first, no matter what. It is ideal if black women can save at least 30% of their income. Yes, I did say that. I know most people say 10% of your income to savings is sufficient; but in my experience that is not enough. Of course 10% is better than nothing; but it is not enough to create the financial security we need especially if you are a lower-income, single woman with children. Let's talk about it.

There are many black women working jobs earning six figures $100,000 plus or close to it. But those women do not represent the vast majority of us. The truth is that many black women are working lower-income jobs paying $40,000 or less. More typical is someone earning $28K - $38K (that's real) Some of us have health insurance; but many of us don't. That's the reality of it. When you are working ANY job or even working for yourself you need to have some serious savings that will replace your income if you lose your job. Right now, millions of Americans are unemployed, most of them are relying on unemployment insurance which is only a temporary measure. These people are not finding jobs as quickly as they had in the past. And they have no savings. Don't be a victim of the current downturn, put as much money away in a savings account as possible.

3. How can you save with so little money? It ain't easy; but it is necessary. Let's say you earn $1600 a month after taxes. I want to use a small salary because it represents what a lot of black women are earning out there and I think there is more than enough financial literature out there for the big money makers.

Okay, you're making $1600 a month after taxes. The rule of thumb says that no more than 30% of your income should go to housing. I say the less money you make, the less you should be spending on housing, so I would try to get it down to 25%. So your rent should not be more than $480 per month. Let's talk about this. I know that a lot of us live in high rent districts and are struggling to pay the rent. This has got to stop. Rent can eat away at your FUTURE income in ways that you can't even imagine. Every dollar you spend on rent is a dollar that can't go to savings. That means less security for you and your family. So if you need to get a roommate or make more money, do it; but don't spend more than 30% of your income on rent--35% max, anything beyond that and you are in financial trouble. I know because I've paid more and nothing but financial problems followed.

$1600 minus $480 (rent) = $1120 (leftover after rent)

Try to get your utilities included in your rent. But if you can't, don't spend more than $100 in utilities per month.

So let's say you have $1020 left over after you pay your utilities. Utilities are gas, electricity, water and phone. If you are only making $1600 a month you can't afford cable, so forget about.

Of that money $480 of it should be going to savings every month, leaving you $540 a month to pay for other bills and expenses. Let's talk about this because I know some of you are saying PUHLEEZE! "I need every last dime of MY MONEY to pay my bills and get my hair DID!" LOL

I use to live beyond my means. When I got out of college I was tens of thousands of dollars in debt. I earned very little money and I couldn't get ahead. My car was repossessed, my student loans were in default and I had a bench warrant for my arrest for failing to appear at a court hearing when a creditor sued me. I was forced to file bankruptcy. That was over 10 years ago. You would think that I learned my lesson, well kind of. But I've made a lot of mistakes and have learned some truths along the way. I want to share those truths with you.

Truth #1: You MUST save. Without savings you will never be financially secure, let alone financially free. A matter of fact, it was this truth that allowed me to file bankruptcy and discharge my debts. I had the foresight to at least save some of my money. Without my savings I wouldn't even have had the money to hire a lawyer.

Truth #2: Debt always equals servitude to the lender. After I filed bankruptcy, I took out another credit card to "rebuild my credit." For years I paid this credit card faithfully, NEVER holding a balance, that was until I ran into financial trouble and used the credit card as a form of income. Huge mistake. I'm still paying for that mistake. It's okay to have a credit card; but I would avoid using it as a "backup savings" no matter what. Because you most likely won't be able to repay the credit card before they hit you with usurious interest and fees.

Truth #3: Financial troubles do hit, eventually. I have found that most people have some type of crisis at least once every ten years that negatively impacts their finances. You must be prepared for these financial "earthquakes." I know you can't be prepared for everything; but you can be prepared in a general sense.

Truth #4: Every black woman needs an emergency fund. Most financial gurus say $1000 is sufficient. I don't agree with them. In my personal experience, it is better to have a emergency fund that can replace your income for at least 3 months if you suddenly found yourself with no job. Preferably, you should have 2 years of income in savings. I read this in the book "Think And Grow Rich: A Black Choice" some years ago, if I remember correctly. Now let's talk about this because I know folks are saying "I can't save that!" I know, I know because I think the same thing. But eventually as you put your $480 dollars into savings it will grow to 2 years worth of savings. In just one year of saving, you will have $5760. In two years - $11,520, three years $17,280 and that's not counting interest earned. Now that's PEACE OF MIND.

One last thought about savings. If for whatever reason you only have very little to put into savings, then save that little money. Be patient your money and peace of mind will grow.

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