“Black Girl Magic” is a movement that was popularized by CaShawn Thompson in 2013. The idea, born as a way to celebrate the beauty, power and resilience of Black women, caught on quickly.
How could it not, since we have witnessed incredible contributions of 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, the young poet Amanda Gorman’s presidential inauguration poem “The Hill We Climb” was a fresh example of this magic. Her performance so breathtaking that it captivated a nation and represented hope, change and the promise of a better America.
So why does America continue to fail Black women, particularly in opportunities to advance our economic standing?
We know all too well that the Black-white wage gaps expand with rising wage inequality. To that point, on average, Black women in the U.S. are paid 38% less than white men and 21% less than white women, according to a recent report from Lean In.
As Black women continue to endure the agonizingly slow pace of change, I encourage all of us to continue the same path of making our own magic with our finances and our lives. Let’s be confident about managing the money within our control. Let’s be selective with how we direct our full capacity of time and resources, directing that energy toward our goals and our dreams. Let’s take ownership of our own lives, voices and joy.
As we continue to “boss up,” let that mantra extend to how we respect and revel in having the money and knowing its power.
Beyonce said it best: “Always stay gracious, best revenge is your paper.”
Yes, Black women have more obstacles than most in getting what’s due, and we have to make more sacrifices than most in stretching what we have.
The key is finding ways to put those assets to work. That means building levels of financial cushions across your checking, savings, investment and retirement accounts, formulating a strong safety net in the short-term and long-term that spans your life and even those of future generations.
Also, you need to know where the money resides and why it’s there.
Checking account: Have enough to cover the cost of one month’s expenses, plus the cost of one unexpected expense ($1,000 threshold).
Savings account: Build up to six months of living expenses, at minimum. Also use this account to set aside funds for one-year spend goals, vacation, down payment on a car, replacing the furnace, etc.
Investment account: Invest money from each paycheck and with windfalls to build up this asset for long-term goals, retirement and wealth transfers. Live off the interest and dividends during retirement and pay low capital gain rates when you sell your appreciated investments.
Qualified retirement account (employer-based): Take advantage of contributing the maximum amount allowed by the IRS each year ($19,500 in 2021). If you’re age 50 or older, add an additional $6,500. Decide if you will contribute tax-deferred (traditional) or after-tax (Roth) or a combination of both.
Individual retirement account: If you fall under the IRS’s adjusted gross income levels for IRAs, you can also sock away up to $6,000 or $7,000 if you are 50 or older.
Let’s not stop there. These assets are not the only way to generate income. Why not add real estate, business ownership and intellectual property (e.g., books, licenses, etc.) to your portfolio? Black women are the queens of hustle and getting things done. Channel that energy to some assets that can and should work on time and overtime for you.
Build your financial squad
Reject any notion that you can do “bad all by yourself” and build your financial squad. The right team of financial experts commissioned by you can care for you by growing and protecting your assets.
With that said, seek out a certified financial planner (look for fee-only fiduciaries), a tax professional (CPAs and EAs) and also an estate planning professional to work closely with you to help with your life and financial goals.
When was the last time you discussed finances with your partner, your children, your parents or even yourself?
Most businesses have employee meetings to discuss goals, objectives and performance. So why wouldn’t you do the same with your own financial situation?
Open conversations regarding money removes the fear, obligation and guilt surrounding your financial decisions.
That money “FOG” blocks healthy views on money. It slows the progress needed to grow, keep and distribute wealth key for supporting the life a woman desires for herself as well as for those whom she loves and supports.
Making time to review your bank accounts and debt balances, as well as your income streams and asset values and setting targets of where you and your family aspire to be will give you confidence to stay on track.
The conversations will also empower all generations to understand the basic principles of wealth building and how it will support you all through the various stages of life. Conversations also help to set the terms of engagement and avoid family financial sabotage by setting boundaries and expectations with sharing and use of money.
We’ve got to think about where we’re putting all of this extra money. Let’s call some time out for grind culture and side hustles. Tireless energy and work output do nothing if there is no plan to turn our assets into residual income.
As we just closed out Black History Month, celebrate International Women’s Day and usher in Women’s History Month, I continue to revel in the achievements of Black women, and hold space for the incredible journey we still have ahead.
Although we continue to grow our allies, share our experiences and uncover these startling economic realities, there is still plenty of road ahead to pave. But the echo chamber is getting louder. Keep using your platforms and speaking your truth. Make your own Black girl money magic.
This article also appears on CNBC.
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