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Budgeting Basics for Black Millennials Centuries of white privilege have created a wealth divide. Inequality and systemic racism continue to drive race-based gaps, making it harder for people of color to get ahead and achieve long-term financial security. Because African Americans have historically had less access to stable jobs and higher wages, they have been disadvantaged in accumulating savings and investments. This has made everything from financial planning for college to retirement planning a whole lot harder for people of color. Getting a head start Fortunately, Black millennials are determined to turn the tides of wealth disparity and are taking steps to secure their future financial health. By starting early and taking control over their finances, more young Black people are able to make savings and free up money to be invested. The first step It can be hard to know where to start, learning is a process and starting simple is key. When it comes to personal finances, Black financial advisors suggest that the best first step is a budget. What is a Budget? A budget is a money plan, it’s a simple outline of your spending. Creating, maintaining and adjusting a budget is the most basic step when it comes to financial planning. Why budgeting is important A budget helps inform your lifelong financial decisions - from financial planning for college to retirement planning. It’s too easy to underestimate how much money is being spent on essential things, such as bills, food, rent/mortgage and transport. Laying out all of your expenses gives you financial guidance and is a reliable way to identify areas where you could save some money. Perhaps you could switch your mobile phone provider to save a few bucks, or catch the bus instead of an Uber. Your budget, or money plan, can: Show you what money you’ll receive and how you will spend it Help you direct your money toward your goals Keep you confidently in control of your finances Be a useful tool for helping you get ahead Help avoid overdrafts and debts Make sure you have enough money for the essentials Help you put money aside for the future (retirement planning) Benefits of budgeting A good budget offers financial guidance, it keeps you aware of your debts and when they will be paid off. Which lets you know exactly when you might have some more money become available. Once money becomes available - you’ll be able to save it or invest it. White people have been hoarding wealth in investments for centuries, now it’s time for people of color to get in on the action. How to get started You can start off by tracking how much money you receive each month on an Excel spreadsheet. Basically, you’re recording how much is coming in (your income) and how much is going out (your spending), then calculating the difference. Grab a piece of paper and pen to try this now. You will find that you either have money leftover (a surplus) or not enough money to cover your spending (a deficit). Now, the aim is to maximise that surplus to make it as much as possible. Which will mean you have more money leftover to pay off debt faster or to save for your goals. What to record in a budget A budget needs to be accurate, if it isn’t a comprehensive record of all your finances then it won’t work. Your budget should include income (paychecks, investments, side-hustles), fixed- expenses (rent/mortgage payments, utilities, credit card and loan payments), non-essential spending (shopping, travel, eating out) and savings. Here’s what you’ll need to record: Day-to-day spending (rent/mortgage, loans, credit cards, phone, power, insurance etc) Annual costs (vehicle registration, medical expenses, holidays) Income information (any after-tax money you have coming in) Savings and investments (including any interest earned) Maintaining your budget In order for a budget to work, you must keep it updated. Too many people put in the work to create a comprehensive budget, then never bother to maintain it. Keep track of your expenses and income using bank statements or receipts, and be sure to record it all in your budget. Try creating a spending journal or downloading a smartphone app. Think of your budget as a form of financial guidance to help you reach your goals. Get some help It can seem like a daunting task, being in control of tracking all those numbers. If you prefer a more client-centered approach why not employ someone to help. There are many Black financial advisors out there who can offer financial guidance specifically tailored to your needs. Don’t just follow money advice from anyone, it helps to get professional and personalised advice from qualified financial services. Black financial advisors understand the specific challenges you face in a world of racial economic equality. Don’t just fight the system, learn how to beat it.
