If there is one thing I think about all the time, it is my future. I think about how I can live a happy life by learning from the mistakes I have seen my family and friends make. One of the key things to learn as an adult is money management. What money management means to me is knowing how to save, create a budget, invest and spend. Money management is a broad term that incorporates services and solutions across the investment industry. In the market, we the consumers have access to a wide range of resources and applications that allow us to individually manage nearly every aspect of our personal finances.
As a young black female, I am already expected not to come out on top. The system has been created to keep the black man (and woman) down by keeping us ignorant. This is why I feel it is extremely important to be financially literate. It is time to create generational wealth for our future descendants. The first step would be finding a financial advisor.
Financial advisors do not have to be some stranger you find online. In fact, they can be a relative or friend. It would be smart to choose someone who is middle-aged and, of course, has their finances together. I encourage you to speak with this person at least once a month. You and your advisor should discuss creating and sticking to a budget and possible investments.
When creating a budget, it is important to be realistic. The point of a budget is to balance your income(s) so that you will not be living from paycheck to paycheck or end every month with your bank account in the negative. After creating the budget, you must stick to it! Do not become greedy if you have surplus money at the end of the month. Self control is key.
Do not forget to add a “savings” to your budget. If you do not already have a savings account, now is the time to get one. There are two types of savings – one for emergencies only such as a car repair and one for a future occasion such as retirement, wedding, etc. No matter which one you choose, it is important that you create one now because you never know what your situation will be in the future.
Lastly, you should talk to your financial advisor about investing. I feel like this is the topic we as black people are the least educated about. Investing is getting your money to work for you. There are so many ways you can invest your money, but you first need to know about how much you will get back from these investments. The basic kinds are stocks, bonds and certificates of deposit (CDs).
According to investopedia.com, a bond is a fixed income investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. A certificate of deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements. A stock (also known as “shares” and “equity”) is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.
There are numerous and in-person classes available to learn more about what you can do with your money.
It is up to you to make the choice to invest your own future, or not.