Equipping Our Community With The Tools To Lead Better Financial Lives

April 27, 2014  |  

According to The State of the African-American Consumer Report, black folks’ buying power in America is expected to reach $1.1 trillion by 2015 with black women leading what the 2013 Nielsen report labeled “relevant” consumers.

Our potential economic power cannot be confused with building generational wealth, which is the ability to own more than you owe and pass that wealth to the next generation.

The Frugal Fab 5— a collective of brown personal finances bloggers committed to inspiring and empowering women of color on the importance of money management and wealth building— are serious about making conversations about wealth as common as conversations about pop culture. Members of The Frugal Fab 5 are Tiffany Aliche of The Budgetnista, Victoria Williams and Tonya Rapley of My Fab Finance, Masha Horton Barnes of Financial Empowerment, and me, The Frugal Feminista.

If you’re looking for a place to start with your finances, follow these tips:

Get organized. Whether your goal is to improve your credit, create a budget, calculate your retirement number, or pay down debt, none of that will be possible if you don’t have a system for keeping yourself organized and streamlined. Getting organized means labeling virtual and real folders with clear names like 2011 Tax Return and 2013 Car Note. Getting organized also means committing to times that you will sit down and tackle your finances. Will you empty all of your loose change into your money jar every Saturday morning? Will you sit down and update your accounts on the 1st and 17th?

Set realistic goals. If you have $100,000 of student loan debt and you earn $55,000 a year, you are setting yourself up for failure to think that you will be able to pay it off in a year. Instead, think realistically about the debt. On the one hand, you want to ensure that you are being aggressive with repayment. On the other hand, you want to avoid “debtors fatigue” where you feel deprived and cope by engaging in high levels of consumption.

Be willing to make lifestyle adjustments to increase your income: If you are “time poor” and know that a second job or side hustle will be too overwhelming, then the only way that you are going to make extra money is to downsize how you currently spend, barter with a fellow frugalista, and monetize your unwanted items. Big lifestyle adjustments may include moving to cheaper city, living with your parents, or selling your car.

Know your stats: The journey to financial freedom begins with knowing where you start in all areas of your financial life. Make sure you know much you earn to the penny. Know the number of student loans you have, whether they are subsidized or unsubsidized, and the amount of interest accrued each day. Educate yourself on your credit scores from each of the three major bureaus: TransUnion, Equifax, and Experian. Know how much money you need to have all of your monthly basic needs covered. Calculate how much money you want to save and invest annually. When you know your stats intimately, you know what next steps make the most sense and get you closer to your financial goals.

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