Op-ed: Black women have to do their own magic with their finances
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“Black Girl Magic” is a movement popularized in 2013 by CaShawn Thompson. The idea that was born to celebrate the beauty, strength, and resilience of black women quickly caught on.
How could it not be since we’ve seen incredible contributions from black women to American culture (actress Tracee Ellis Ross), society (Vice President Kamala Harris) and the workforce (Mellody Hobson, President / Co-CEO of Ariel Investments)? And of course, young poet Amanda Gorman’s inaugural poem “The Hill We Climb” was a new example of this magic. Her performance was so breathtaking that it fascinated a nation and represented hope, change and the promise of a better America.
Why does America continue to fail because of black women, especially opportunities to improve our economic position?
We know all too well that the black and white wage differentials increase as wage inequality increases. By then, black women in the US are getting an average of 38% less than white men and 21% less than white women, according to a recent report by Lean In.
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As black women continue to endure the excruciatingly slow pace of change, I encourage us all to continue down the same path of creating our own magic with our finances and our lives. Let us be confident that we are managing the money under our control. Let us selectively decide how to direct our full time and resource capacity and direct this energy towards our goals and dreams. Let us take possession of our own lives, our voices, and our joy.
If we continue to be “boss”, let this mantra extend to how we respect and enjoy money when we have it and know its power.
Beyonce said it best: “Always be gracious, the best vengeance is your paper.”
Yes, black women have more barriers than most when it comes to getting what is due, and we have to make more sacrifices than most when it comes to stretching what we have.
The key is to find ways to get these assets up and running. This means that you need to build up financial buffers across your checking, savings, investment and retirement accounts and formulate a strong short-term and long-term safety net that will encompass your life and even that of future generations.
Also, you need to know where the money is and why it is there.
- Checking account: Have enough to cover the cost of a month’s expense plus the cost of an unexpected expense (threshold of $ 1,000).
- Saving account: Build up to at least six months of living expenses. Also use this account to raise funds for annual spending goals, vacation, down payment for a car, stove replacement, and more.
- Investment account: Invest cash from every paycheck and with lucky breaks to build that asset for long term goals, retirement, and wealth transfers. Live off the interest and dividends in retirement and pay low capital gain rates when you sell your cherished assets.
- Qualified retirement account (employer-based): Take advantage of the maximum amount allowed annually by the IRS ($ 19,500 in 2021). If you are 50 years or older add an additional $ 6,500. Decide whether you want to contribute deferred tax (traditional) or after tax (Roth) or a combination of both.
- Individual retirement account: Also, if you fall below the IRS Gross Adjusted Income for IRAs, you can save up to $ 6,000 or $ 7,000 if you are 50 years or older.
Let’s not stop there. These assets aren’t the only way to generate income. Why not add real estate, business property, and intellectual property (e.g. books, licenses, etc.) to your portfolio? Black women are the queens of the hustle and bustle and getting things done. Pass that energy on to some assets that can and should work for you on time and overtime.
Build your finance squad
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Reject any idea that you can “do badly all by yourself” and build your finance squad. The right team of financial professionals hired by you can take care of you by growing and protecting your wealth.
With that in mind, find a certified financial planner (look for fee-only trustees), tax advisor (CPAs and EAs), and an estate planner to work closely with you to help you meet your life and financial goals.
When was the last time you talked about finances with your partner, children, parents, or even yourself?
Most companies hold staff meetings to discuss goals, objectives, and performance. Why shouldn’t you do the same with your own financial situation?
Open conversations about money eliminate the fear, obligation, and guilt associated with your financial decisions.
Tireless energy and work performance do nothing if there is no plan to convert our assets into a residual income.
Co-Founder and Co-CEO of 2050 Wealth Partners
The money “FOG” blocks healthy beliefs about money. It slows the progress necessary to increase, maintain and distribute wealth, to sustain the life a woman desires for herself as well as for those she loves and supports.
When you take the time to review your bank accounts and debt balances, income streams and assets, and set goals for where you and your family want to be, you can be sure you’re staying on the right track.
The conversations will also enable all generations to understand the basic principles of wealth creation and how they will support you all at different stages of life. Conversations also help set the terms of engagement and avoid financial sabotage in the family by setting limits and expectations about the sharing and use of money.
We need to think about where we are going to put all this extra money. Let’s take some time out for the grind culture and the sideline. Tireless energy and work do nothing if there is no plan to convert our assets into a residual income.
As we have just completed Black History Month, celebrating International Women’s Day, and ushering in Women’s History Month, I continue to indulge in the achievements of black women and hold space for the incredible journey that we have yet to come.
While we continue to build our allies, share our experiences, and uncover these startling economic realities, there is still much to be done. But the echo chamber gets louder. Keep using your platforms and speaking your truth. Make your own black girl money magic.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.