We can not solve our problems with the same level of thinking about our money. It will require you to level up a bit, add discipline and habits to your money routine. We don’t want to be ‘rich’ – we are already ‘rich’ in cultura and our U.S. way of life as Latinx, but to achieve ‘wealth’? To go from cash poor to asset owning, retirement bound wealth requires next level thinking.
Our Latinx community is bound to lose out on wealth accrual over time. It is said by year,“2053, Black households will have a median wealth of zero. It will take Latino households another 20 years to drop to the same level, according to an analysis by non-profits Prosperity Now (formerly CFED) and the Institute for Policy Studies.”
So what can you as an individual do about that? As a woman, do? (Did you know women outlive men? So retirement savings is a priority.)
Get #finlit, ‘financially literate’.
What are some steps towards the direction of getting bolder and ‘finlit’?
We thought you never ask.
Here. We. Go.
Grow In Self-Awareness
Get honest with yourself. Why are your money problems happening? You can blame our economy, we can have a ‘the game is rigged’ mentality – and structural social issues do exist, however our ability to be successful with our money depends on our ability to understand our weaknesses too. Got spending triggers like a ‘bad day’ at work, bad relationships taking up your energy, stressing you? That retail therapy can cost you if you have too many ‘bad days’, right? Get real ‘therapy’ then. Do you have habits like breaking commitments and promises to yourself and others? You might want to take a step back and be real, and ask yourself ‘am I capable of saving money?’ Am I patient? Because time and money go hand in hand, you’ll find out later in the process of saving/investing your money. You have to understand yourself, break through your handicaps to play to your strengths – Are you a hustler? Crafty? Builder? Okay then, you can monetize on those strengths to make more. #SideHustles
Build Up Your Arsenal of Knowledge Everyday. Everyday.
Here’s a list of sites we love.
Mr. Money Moustache funny title, but good info
Simple Math Formulas
Keep these handy, in your wallet. Bookmark this article.
The 1/2000 rule: For every $1 per hour you make, you make $2000 in pretax money (before taxes) Translation – if you earn $25 an hour, your annual salary will approximate $50,000.
Income Rule: House hunting? If a home costs more than 2x your annual income. Don’t buy it.
Rule of 72: If you grow your money at 10% rate. You divide 72 by 10 and 7.2 years will be needed to double your money.
Get Out Of or Lower Debt
“Debt is Bondage” – Susy Orman, Financial Expert
If you can do anything, just know what you spend on a given month. Budgets – suck. However, to get out of debt – you can always make more money rather than decrease your quality of life. We all know, deprivation of your lattes, anything for your ‘self-care’, buying books, music is not cool, either. Know your options. You can: Increase your take home pay to pay off consumer debt (credit cards, personal loans. Downsize your living. Move into a less expensive place. Rent a room. Rent your bike. Sell your closet. Pick up a side hustle. Find a part time evening job.
Student loan interest rates have increased. Put everything you can, with a sense of urgency into paying off debts. And do everything you can, to stay out of debt.
Now, here is food for thought – the thought or best practice is to always pay off debt before you invest or start saving. We say, forget that conventional advice and start saving and/or investing now! You could be forever in debt if say, your car breaks down and you need to use your credit card to pay for repairs or you acquire another student loan to finish off or repeat a school semester. Debt will always be around, if you don’t attempt to pay off, get lowered or under control. So don’t put off building a savings account. Build a savings account for a recommended 9 months of living in case you lose your job, an emergency savings for ‘car repairs’ and an investment account to earn compounded interest.
Double That Money, Honey
Compound interest. It’s how the wealthy get paid, amigas. And yes, add dividends from stocks too.
And the poor get poorer, when high interest credit cards, say like a 24.9% interest rate card compound! And factor in that annual membership fee $99, compounds every year too. Try to negotiate down your interest rates, especially if your FICO credit score has improved or is above 650 or a better 700.
Aim for a savings account, an investment account for beginners like Acorn, where you multiple your earned interest year after year, adding of course, your allocated savings/investment amount every month by automating. With automation, you will set it, forget it and never miss it – then boom, open your statement to a nice surprise. Time is on your side, if you start now. Every quarter you do want to monitor, adjust investments, if necessary but the rule of thumb is to think long term strategy – you may gain or lose depending on the market.
A retirement savings account is really a tax savings tool, not necessarily a ‘savings’ account. So tax-deferred or pre-tax retirement accounts should be used and taken up if part of your employee benefits.
Employer sponsored 401ks should be taken advantage of, for sure! Employers will dollar match. For every $1, they add a $1. That is FREE money!
We forget how much inflation matters. It’s a ‘silent killer’. It will fall under your radar. You won’t see the erosion happening. It’s scary. It’s insidious.
Plan for an increase of basic expenses like food, transportation, gas, etc. to be between 2-4% a year. Say you receive a 3% raise, well, expect 4% inflation to break you practically below even or run you under. What you should do with that raise? Save it or invest it to grow with compound interest.