Jennifer Jonassaint, a Savvy Ladies Helpline Volunteer answers women’s financial questions submitted to the Free Financial Helpline
In 2022, Black women earned 70% as much as White men, compared to a ratio of 83% for White women. The combination of racial wealth inequality and the financial gender gap make it especially challenging for Black/African American women to build economic security. In addition to systemic inequality and centuries of discrimination and exploitation, the racial and gender gaps in financial literacy play a key role in these wealth disparities. According to the 2018 National Financial Capability Study by the FINRA foundation, financial literacy rates of Black Americans and Hispanic Americans were below the national average and lower than those of Asian and White Americans.
While there is no easy fix to racial and gender economic disparities, at Savvy Ladies we believe in promoting free financial education and resources that can help Black/African American and all women to empower themselves with knowledge to build a bright future for themselves and their families. One way we do this is through our Free Financial Helpline, which connects thousands of women in the U.S. from all backgrounds with financial advisors for pro-bono 1:1 financial mentoring.
What are the top family financial concerns for Black or African American women in 2023? Below are some of the most compelling family financial questions we’ve received from women self-identified as Black or African American, answered by Savvy Ladies Helpline Volunteer Jennifer Jonassaint.
I’ve never budgeted before. How do I begin?
Make a list of all your sources of income, expenses, categorize your expenses: Determine your financial goals, both short-term and long-term. Use a budgeting tool to create a monthly budget. Start by allocating your income towards your essential expenses first food, etc, then your financial goals, next toward any remaining income towards your non-essential expenses. Track your spending weekly to make sure you’re sticking to your budget. Adjust as needed. It’s important to be flexible and make changes as needed. Remember that budgeting is a process, and it may take some time to get used to tracking your expenses and sticking to your budget
How do you build a budget when you don’t make enough money for monthly expenses?
Make a list of all your sources of income and then make a list of all your expenses, prioritize your expenses by listing them in order of importance. Your top priority should be your essential expenses, like rent, utilities, and food. Non-essential expenses, like entertainment and dining out, should be lower on the list. Look for ways to cut expenses, look for ways to increase your income. If you’re struggling to make ends meet, consider looking into assistance programs like food stamps or rental assistance, consider finding a higher-paying job or exploring other sources of income.
How do I save now and avoid living paycheck to paycheck?
Similar steps to above. Prioritize your savings: Make savings a priority in your budget. Aim to save at least 10% of your income each month. You can start by building an emergency fund of three to six months’ worth of living expenses. Set up automatic transfers from your checking account to your savings account each month. Cut back on non-essential expenses, like dining out and entertainment, or finding ways to lower your essential expenses, like finding a cheaper place to live or negotiating lower bills. Look for ways to increase your income, like taking on a side job or gig, asking for a raise at work, or starting a small business.
I need assistance with paying bills on time.
Assemble all your bills. Get a google/paper calendar. Write when each bill is due on the calendar. Then automate each bill based on your pay cycle, with a 7 day pad payment timeframe. Set bill payment alerts on your device phone etc. Rinse and repeat until paid.
How to stick to a budget, start an emergency fund and start investing?
Track all of your income and expenses in a weekly/bi monthly/monthly spending plan (AKA budget). Pay your basic needs first, food, housing, utilities and insurance. Prioritize paying expenses after basics are satisfied. Automate at least 5-10 % of your income into a separate emergency fund savings account for short term goals. If funds are limited, consider investing first in your work plans up to your employer match amount for your long term game plan. Consider working with a financial coach or counselor to help you create a future savings and investing game plan that works for you.
How can I create a budget so that I can get rid of debt and start family planning?
Same as above. Allocate your income towards your essential expenses first, toward emergency savings, then a portion of your income towards your debt payments, then financial goals like planning for your family’s future. Decide which debt payoff plan you want to implement. One of the best ways to pay off debt is to automate your debt payments. Set up automatic payments for your debts, so you don’t have to worry about making payments manually each month. Be consistent: Stick to your budget consistently each month. Check in regularly to make sure you’re on track and adjust your budget if necessary.
I feel like I’m always chasing money and it’s never enough. How can I empower myself and my daughters to have a healthy relationship with money?
Getting financial goals can help you stay motivated and focused. Identify your short-term and long-term financial goals, such as paying off debt, building an emergency fund, or saving for a car or a down payment on a home. Developing good financial habits can help you manage your money more effectively. This might include things like tracking your spending, becoming aware by journaling feelings around money, avoiding impulse purchases, and automating your savings. Education is key to developing a healthy relationship with money. Look for resources that can help you and your daughters learn more about personal finance, such as books, online courses, or financial counselors through non profits agencies. Finding ways to increase your income can help you feel less like you’re always chasing money. Look for ways to earn more money, such as taking on a side job or gig, asking for a raise at work, or starting a small business. Finally, remember that you are a role model for your daughters. Lead by example by practicing good financial habits, being open and honest about money, and prioritizing your financial goals. By following these tips, you can empower yourself and your daughters to have a healthy relationship with money and achieve financial stability and security.
How can I prioritize my spending in order to be able to save and invest?
Same as above. Finally, remember to live within your means. Avoid overspending on things you don’t need, and prioritize your essential expenses first. This will help you avoid debt and achieve your financial goals more quickly. By following these tips, you can learn how to save, invest, and prioritize your money effectively, and achieve financial stability and security over time.
Should I do a balance transfer or personal loan to decrease credit card debt?
In general, a balance transfer can be a good option if you have a plan to pay off the debt within the promotional period and can save on interest charges. A personal loan can be a better option if you need a longer repayment term or a fixed monthly payment. Be sure to compare the interest rates, fees, and repayment terms of both options and choose the one that works best for your situation. It’s also important to create a plan to pay off the debt, and avoid accumulating more credit card debt in the future.
In regards to paying off debt, do I start with the smallest balance or one with the highest interest rate?
There are several ways to pay off debt: snowball (pay the smallest debt first) and avalanche (pay the highest interest debt first). Regardless of which method you choose, it’s important to create a plan to pay off your debts and stick to it. Make sure you are making at least the minimum payments on all of your debts, and consider increasing your payments on the debt you are targeting first. Over time, as you pay off your debts, you will have more money available to put towards your other debts, and you will be one step closer to achieving financial freedom.
Is consolidating debt the best option for me?
Consider your overall financial goals when deciding whether to consolidate your debt. If your goal is to pay off your debt quickly and become debt-free, consolidating your debt with a lower interest rate loan could help you achieve that goal. However, if your goal is to lower your monthly payments and free up cash flow, debt consolidation may not be the best option for you. Ultimately, whether or not debt consolidation is the best option for you depends on your individual situation and financial goals. Be sure to compare interest rates, fees, and loan terms when shopping for a consolidation loan, and consider talking to a financial advisor or credit counselor for personalized advice.
How do you tackle large credit card debt when it’s on one credit card? If you have the money, should you pay it off or keep it in savings?
Take a close look at your income, expenses, and debts to determine how much money you can realistically put towards paying off your credit card debt each month. Prioritize which debts to pay off first. If your credit score is good and you have a balance transfer option available, you may be able to transfer your credit card balance to a new credit card with a lower interest rate. This can help you save money on interest charges and pay off your debt faster. While you are paying off your credit card debt, avoid using the card for additional purchases. This will only increase your debt and make it harder to pay off. If you have savings, you may be tempted to use that money to pay off your credit card debt. While it’s generally a good idea to use savings to pay off debt, it’s important to consider your entire financial situation. If you don’t have an emergency fund, you may want to keep some of your savings in case of unexpected expenses. In general, it’s a good idea to pay off high-interest debt like credit card debt before focusing on building up savings. Remember, paying off credit card debt takes time and commitment, but it’s worth it to get out of debt and improve your financial well-being. Consider working with a credit counselor for personalized advice on how to tackle your credit card debt.
I had a lot of credit card debt and I consolidated it with a personal loan 6 months ago. However, in that time, I’ve accumulated a substantial credit card debt again. Should I do another loan and this time either cut up my cards or just cancel them entirely?
If you have accumulated a substantial credit card debt again after consolidating it with a personal loan, it may be worth considering consolidating your debt with another loan or balance transfer to help you pay off the debt more quickly and efficiently. However, before you do so, it’s important to identify the root cause of why you accumulated the credit card debt again. It may be helpful to examine your spending habits and budget to identify areas where you can cut back on expenses and reduce your debt. If you don’t address the underlying issues, you may find yourself in the same situation again. In addition, if you do decide to consolidate your debt with another loan or balance transfer, it’s important to make sure that you don’t continue to use your credit cards and accumulate more debt. Cutting up or canceling your credit cards may be a good strategy to prevent further debt accumulation, but it’s important to remember that this won’t address the root cause of your debt. Ultimately, the decision to consolidate your debt again depends on your individual financial situation and goals. It may be helpful to talk to a credit counselor to get personalized advice and guidance on how to address your debt and improve your financial well-being.
I need help budgeting and making wise financial choices regarding financing for school and health.
Start by creating a budget that outlines your income and expenses. This will help you identify areas where you can cut back on spending and allocate more money towards school and health expenses. Be sure to include all necessary expenses, including tuition, textbooks, healthcare premiums, and out-of-pocket costs. Consider ways to save money on school and health expenses, such as applying for scholarships, grants, or financial aid. Look for healthcare providers who offer discounted services or payment plans, and compare prices for medications and procedures. Use free or low-cost resources, such as online study materials and community health clinics, whenever possible. If you need to borrow money to cover school or health expenses, consider all your financing options carefully. Compare interest rates, repayment terms, and fees for loans, credit cards, and other financing options. Make sure you understand the terms and conditions of any financing you choose and that you can afford the monthly payments. It’s important to have a financial safety net in case of unexpected expenses, such as medical bills or emergency repairs. Aim to save at least three to six months’ worth of living expenses in an emergency fund. This will help you avoid taking on additional debt or dipping into your savings for unexpected expenses. If you’re struggling to manage your finances or have questions about financing options for school or health expenses, consider seeking advice from a credit counselor since they can offer personalized guidance on managing debt, building credit, and making wise financial decisions. Remember, managing your finances can be challenging, especially when dealing with significant expenses like school or health costs.
I would like some advice on how to budget and increase my income as a full-time college student and mother.
Always begin by creating a budget that outlines your income and expenses, including school-related expenses. This will help you identify areas where you can cut back on spending and allocate more money towards your financial goals. Consider ways to save money on your expenses, such as shopping for groceries in bulk, using public transportation instead of owning a car, and looking for free or low-cost activities to do with your family. Avoid impulse purchases and be mindful of your spending. Look for part-time work opportunities that can fit around your school and family schedule. Many colleges offer work-study programs that provide flexible, part-time work for students, and you can also look for freelance or gig work opportunities online.
Explore financial aid options: As a college student, you may be eligible for financial aid, such as scholarships, grants, and loans. Look into all available options to help cover the cost of tuition, books, and other school-related expenses. If you’re struggling to manage your finances or have questions about increasing your income, consider seeking advice from a credit counselor. They can offer personalized guidance on managing debt, building credit, and making wise financial decisions.
Have a financial question? Get connected with a finance professional for free, 1:1 mentoring on our Free Financial Helpline.
About the expert
Jennifer Jonassaint is a Certified Financial & Life and Transformational Coach and Savvy Ladies Helpline Volunteer.