One of the most significant ways to build your power is to build your wealth. The average wealth of Black families was about $780,000 less than white families in 2016, a disparity which has increased since 1963 (1). Most people say they live paycheck to paycheck and could not pay their regular bills if they had a financial emergency. Wealth is different than income; two households may have the same income, but the household with fewer expenses and more pre-existing income will have more wealth (2).
It is critical that we build wealth for ourselves and leave an inheritance for our families.
Below are three ways you can start today.
1. Make your money work for you.
Most people's money is sitting in a bank account or in cash, and this means your money is not working for you. See if your bank has accounts that earn interest. This means that as your money sits in that account, it earns money and you'll see money added to your account each month. It may only be a few cents each month, but that is better than nothing. You also do not need cash sitting around. Money loses value so you want it to work for you before you use it to accomplish your goals. If you do not need the cash that day, put it in a savings account because it will earn interest there as well.
2. Save $1000 for an emergency.
Make a plan to save some money every check until you have $1000 in an interest-earning account. You may think you don't make or have any "extra" money to do this but you do not want one emergency or unplanned expense to force you into an unwanted situation, like getting a new credit card or missing a bill and having to pay late fees or having your credit report take a hit. Even though most people say they are living paycheck to paycheck, the average person spends about $485 a month on non-essential items (3). Track your expenses to see where your money is actually going. Then, make a plan to save something from every paycheck and automate having that money go directly into your savings account.
3. Pay off your credit card debt.
Paying off debt is a long-term goal, but it requires a right-now plan.
This may feel easier said than done, but you've got to have a plan to eliminate your debt or you will continue to owe others more money than you make. Think of credit cards like modern day sharecropping. It feels necessary at the time, those with the wealth are not helping you but are using you to build their wealth, and no matter how hard you work you can't get out from under their thumbs.
a) Continue to make payments on all your accounts so nothing becomes delinquent.
b) For the credit card with the lowest balance, really try and pay double the minimum balance due, and do not make any new purchases on that card. This will require re-prioritizing how your money is spent, but remember the goal is to have your money work for you -- building your legacy, not someone else's.
c) Keep paying the same dollar amount (double the minimum balance of the first month) until you pay it off.
d) Interest is still accruing on that card so you won't have an exact date when you'll be able to pay it off, but write down your best estimate and look forward to that date. Celebrate when it arrives! Write a note to a descendant about the sacrifices you are making for them. Take a walk under blue skies and pat yourself on the back. Soak in how you've completed a major step towards power and independence.
e) When you get home, schedule that same dollar amount as an additional payment on the credit card with the next lowest balance, and stop making new purchases on that card. You've already learned to live without that money, so keep on doing so, and get out from under the weight of debt! Keep the cycle going and keep celebrating!
Share your success stories with us and with those around you so that we all stay encouraged and keep building our power.
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