How many of us were taught financial management in high school? We were taught mathematics with examples based on real life moments like “if you went to by a car what would 30 percent of the total price of the car worth 30,000 dollars be?” Was there ever a class for economics in Jr. High or High school?
A chosen few spend their lives educating communities on how to navigate the financial system.
Financial freedom and economic equality are the 21st century renaissance for the African American community just as the Harlem renaissance was for the Negro in the beginning of the 20th century.
As a college degree moved you up the economic ladder, financial analysts say that today your credit score plays an equal role in your financial success. We are going to look at some simple ways in which we can become more financial savvy in today’s world economic climate.
Devin Stubblefield, a financial advisor for more than twenty years, gives this advice when it comes to how one should begin to look at how to strengthen your financial position, “it doesn’t matter what your circumstances are or what your situation may have been, you always have the ability to make things better.”
According to statistics to be poor means possessing insufficient income during the year to buy bare necessities.
Today 39.7 million people in American live in poverty. Through initiatives like the Direct Impact Dollars Initiative Fund and Elevate 2018, men and women are pooling together in an effort to educate those willing to learn and anyone who will listen about the best way to manage what you earn, how to save and invest, managing your credit and how to plan for the future.
Stubblefield goes on to say, “in 2019 be intentional to create the circumstances that will bring forth opportunities to increase your overall financial well-being.”
Most people will agree that although money may not be the end all, its role in society is vital and there is a very strong correlation between individual, community and societal well-being and financial wellness and income equality.
Understanding financial basics is very important, a mistake or mismanagement can hamper long term financial success. Not understanding credit and how it can affect one’s credit score are a prime example of this.
According to US Bank’s 2017 Financial Literacy Study, “misunderstandings could have a long-lasting impact, affecting everything from the ability to get a mortgage to the interest rate you pay for a credit card.”
Historically, African Americans are consumers and lag far behind mainstream society as it relates to wealth and home ownership. Many experts say that it seems that we, as African Americans, spend a lot of money, but rarely do we save and invest particularly in ourselves.
“We as a people need to avoid or even eliminate those things that can result in signature financial challenges,” says Stubblefield. “For example, every bit of interest you’re being charged on your debt is offsetting any interest you may gain on your assets.”
“Because debt interest payments occur monthly it puts a demand on the income you earn today and future income you haven’t even earn yet, until the debt is paid off, Stubblefield continues.
According to Stubblefield, most people don’t realize how much of their future income is already pledged away to debt and interest payments. A major mistake that people can make is not planning for change. Things like being laid off from work, market crashes, recessions, depressions, bubbles bursting and the like.
As the 2000’s kicked in, the country’s financial stability was in question as the stock markets and real estate bubble took hits. To capitalize on this in an optimistic vision, Stubblefield coupled with organizations like the Urban League, the Black Dollar Days Task Force and churches began enriching the community with financial and first-time homebuyer’s seminars, teaching the public how to build wealth through property ownership and the strengthening of credit.
“After acquiring the necessary knowledge and experience to enlighten those willing to listen and learn regarding bettering their credit, building financial knowledge and becoming a homeowner on their way to financial freedom, I felt this was what I was meant to do,” reflects Stubblefield. “The next step was teaching people self-sufficiency, being your own boss and self-employment.”
Scholars and experts promote five things you can do to improve your financial situation in the New Year.
Number one: Access where you are, find out what your numbers are.
“This means knowing your cash flow, your income minus expenses resulting either in positive gains or negative losses,” says Stubblefield. “Know your net worth this means your assets minus liabilities.”
Stubblefield continued to explain that another aspect of debt assessment is your debt-to-income ratio by calculating your monthly debt payments divided by your gross monthly income and lastly your credit scores. Learning the credit game, how your credit and management of credit affects your score.
All of these address you accessing where you’re at and what are your numbers.
Number two: Be honest with yourself about working what’s working financially for you and what is not.
Number three: Align your financials with your values.
“Because most people spend money on frivolous stuff, we should align our money with our value. Then money management becomes more meaningful,” says Stubblefield.
Number four: Make sure you have proper insurances in every area of your life — life insurance, health insurance and more practical disability insurance because the future is unpredictable.
And finally, Number five: Put together realistic savings plans.
“By putting together realistic savings plans 401k, long term goals, any financial goal that is mid to long term needs a saving plan,” says Stubblefield.
All of this may seem a lot to take in and is not meant to be easy, but according to Reba Dominski’s The Importance of Financial Literacy for A Secure Future, in the Washington Post, “The good news, though, is that all of us can improve the security of our futures through financial literacy.”
“With a better understanding of the basics of finance, how to save, budget and invest, we can increase both our earning potential our prospects for a solid financial future,” concludes Dominiski.