Overcoming financial roadblocks like not making enough and unexpected expenses can make improving financial condition hard for many people, including Black Americans.
Conquering the barricades can be more burdensome for people of color than their non-diverse peers for several reasons. For instance, Black families are less likely to own a home that can be used as an asset to generate wealth. They typically have higher debt levels.
Statistics help illustrate why taking steps to erase financial roadblocks is critical. Roughly 27% of Americans have overspent to influence someone else. The median household income in 2022 for Black American families was around $53,000, much less than over $80,000 for white families. As such, that makes the racial wealth gap even more unpleasing for Blacks.
Further, Black borrowers, on average, generally have lower credit scores than their white borrowers. That is important, for example, as it makes it harder for Blacks to get a mortgage to buy a home. Credit scores also can have a large impact on determining how much a home loan will cost.
To help individuals overcome financial roadblocks, BLACK ENTERPRISE developed some tips based on research to help them achieve that.
CREATE A BUDGET
This can help you monitor where your money is going and spot opportunities to cut unnecessary expenses. And be mindful that it’s never too late to increase savings if you are not already doing that. Be sure to erase student loans, credit cards, car notes, debt, and urgent obligations.
SPEND UNDER WHAT YOU MAKE
Doing this can be challenging now, given inflation has boosted the cost of many things like food, housing, and other consumer items. Some ways to help spend less than what you take home can include setting up a transfer of your money into an automated high-yielding savings account, separate from a direct-deposit checking account. This can help save you money before you see it.
CONSIDER OTHER REVENUE STREAMS
Examine how to generate extra sources of revenue to help conquer financial challenges. Diversifying your income could come from various potential sources, including part-time work, freelancing, starting a side business, and consulting. The funds could be used to supplement your main income.
TAKE ACTIONS TO PAY OFF DEBT
This can be game-changing for financial success. Try to pay it off as fast as you can with as little interest as possible. Pay off accounts with the highest interest with what you can afford and pay the minimum on all other debts. If you have credit card debt, consolidate what you can into a card with a lower or 0% annual percentage for as long as you can. This could help pay off debt before interest is charged again.
SET UP AN EMERGENCY FUND
Many people tap into their checking or savings accounts because they don’t have this fund. That is largely true when a disaster hits. People may turn to a credit card or incur new debt if they are unprepared for a catastrophic event. Building up at least three to six months’ worth of expenses is suggested by experts to help provide such a financial lifeline.
DO YOUR HOMEWORK
There are several options to help you overcome financial difficulties. They often can provide guidance and sights to help improve your personal finances. Some examples online include this site , this place, and another here.
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