#BudgetBae: 4 Tips On Building Your Wealth From A Financial Pro
We're all about securing the bag, but what do you do with it once you get it? While getting that bag is the goal, building wealth is the ultimate reward. Who wants to look up and wonder where all their money went? …Only to realize that Popeye's chicken sandwich and online shopping got way too many of our hard-earned coins.
From creating a habit of saving, no matter what your salary (or lack thereof) is, to planning for the future, our budget bae Pamela Capalad, founder of Brunch & Budget and more, offered up quite a few gems that will make building wealth easier than ever.
As told to Char J. Patterson.
Saving On A Budget:
Giphy"We're all told to have a savings goal of 3-6 months of living expenses, and we need to hit a certain number and have it in the bank. For a lot of people, it's really intimidating to hear that. You hear that and you think, 'Well that's never gonna happen, so I'm just never gonna save.' That's usually where our mind goes whether we know it or not. How are you thinking about saving? If you're thinking about it as this one goal that you're finally going to reach, and it just has to be the perfect time (you get a bonus, you get a tax refund, etc.), you need to adjust your mindset.
Make savings a habit, make it a part of your life.
Pay yourself first. Even though it sounds a little weird, think about your savings as a bill. Just like you pay your rent, just like you pay your credit card bill, pay yourself; integrate an amount in your budget that you won't miss. It's more important to get into the act of saving than to try to reach a certain number.
Have a savings account in a place that's totally different from where you bank for your checking account.
When you have your checking and your savings at the same bank, you tend to transfer one amount from your savings to your checking when you're running a little low. Also, most big banks aren't paying you much interest at all for parking your money there. An easy Google search of high-yielding savings accounts will lead you to banks that will help your money make money.
Have part of your direct deposit go directly into your savings.
This way, you never see it at all. You don't have to miss it, you don't have to wonder if it went into your savings. Whatever ends up in your checking account, that's what you have to spend."
Spend What’s Important To You:
Giphy"Budgeting is not this formula. We hear you have to X percentage toward food, X toward your necessities. Before you pull out the spreadsheet, figure out what you actually enjoy spending money on. The categories are your basics like rent, utilities, cell phone, internet, transportation, gas, groceries; all the things you need to physically live and survive. Figure out what this number is and set it aside, then you can see what you have leftover. This is where you get into what your values are. Remember, budgets are not restricting or denying yourself.
Psychologically, what ends up happening is you restrict yourself and then one day you spiral and splurge, and it doesn't end up working out.
After the basics, the other values are 'the details' and 'the nothings'. The details are those things that come to mind when someone asks you to create a budget. You think, 'Do I have to give up my coffee every day? Do I have to give up eating out? Do I have to give up shopping? Do I have to give up on getting my hair and my nails done?' When you have things you don't want to give up, those are your details. They get you through the day and feed you emotionally. It's important to spend money on these things because when we deny ourselves, we end up spending money anyway. You're not taking that $5 and putting it in your savings account. You still spend the money, just on the nothing's value. The nothing is where your money goes but you don't even realize it. The things that don't even come to mind when someone asks you where you spend money, because you don't remember spending money on it.
Before you come up with your budget, see where your money is going. Is it a detail or is it a nothing?
You'll find clear categories and realize that you can give yourself permission to spend money on the details and what's important to you. You'll feel good instead of guilty about it. Then, you can enjoy spending money and you'll be less likely to spend money on the 'nothings'."
Boost That Credit Score:
Giphy"The first thing is knowing what it is, knowing how to read a credit report, and knowing what impacts it. There are a lot of factors that go into your credit. But the ones that impact people the most is making sure you make your payments on time.
35% of your score is on-time payments.
One late payment can affect your credit score for seven years, which is ridiculous, but that's how it works. And that's just 30 days late. I would suggest enrolling in autopay for minimum payments on your credit card. No matter what, making your minimum payment on time, counts as making your payment on time. If you keep a very clean on-time payment record, that's 35% of your score your right there.
30% of your score is based on the balance of your card, compared to your credit limit.
A rule of thumb is you don't want to have more than 30% of the limit on your balance. For example, if you have a $1,000 limit, you don't want to put more than $300 on it at a time. So if you want to use your card, and you have a low limit, there are a couple of things you can do. You can call your credit card company and ask them to increase your limit. You can do this as often as every six months. Sometimes you're pre-approved and it doesn't affect your credit at all, but sometimes they do check your credit. It does affect your score negatively when they check your credit, but it will go back after a couple of months. I had a client who diligently called their credit card company every six months, and her limit is now more than her salary.
You can also pay your credit card bill more often than once a month. They only report your balance every 30 days, so as long as you keep your balance low within a certain timeframe, you can keep using it, getting points, and all that good stuff. If your goal is to get your score higher, I would start paying your cards down to 30% of those limits. If you get it below that, you'll see it go up in the next months or two. Either way, your credit usage affects your score pretty quickly, whether it's above or below the 30%."
Get An Estate Plan Together:
Giphy"No one wants to think about an estate plan. No one thinks they need one. When you hear the word "estate", you think, 'Oh that's for rich people.' But we all have access and things we want to pass on to people.
The easiest thing to do is to name a beneficiary.
You can do this on your retirement account, your 401k, your pension at work, whatever it is. You just need to know their birthday and social security number, and you're done. You don't have to think about it unless something changes. As long as you have a beneficiary who's still alive, the money automatically passes to that person, and it doesn't go through the court system at all. When it goes through the court system, you have to pay court fees, lawyer fees, etc.; and when that happens, that chips away at the money that actually goes to your beneficiaries.
If you just want to pass on money from your bank account, you can complete a transfer-on-death. The name is really morbid, but you just ask your bank for the form, and you can list beneficiaries for all of your bank accounts – checking, savings, and any investment accounts that isn't an investment account.
If you have tangible things you want to leave to people, you can set up a will and name beneficiaries through the will. Anything mentioned in the will goes through probate court, but it's a pretty cut and dry situation. Your family might not need to hire attorneys through the process, they can just go through it themselves. If you own your home, you 1000% need to set up a will. If you have children, you need to set up a will to name guardians for your children in case something happens to their mother and father.
Another important document is the health care property. It allows someone to speak on your behalf for medical decisions, in case you can't speak on your own. The default is your spouse, then your parents, then your siblings, then your next of kin and things like that. I've seen situations where people don't have their parents speaking for them, and they have a significant other who they're not married to. I advise them to fill out a health care property document that be found right on Google, and just give it to their doctor.
Also, a power of attorney is another document that allows someone to handle financial matters for you, in case you couldn't do it yourself. This would be someone to access your bank account, pay your bills, etc.
In the end, I think what tends to happen is, we think of personal finances as something we'll get to eventually. But in reality, when we don't get into these things, we get taken advantage of. When we can get in control of our finances, that's how you can really empower yourself and others."
Want more stories like this? Sign up for our newsletter here and check out the related reads below:
The Best Articles On Money For People In Their 20s
Money Management Tips Every Millennial Should Know
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Charmaine Patterson is a journalist, lifestyle blogger, and a lover of all things pop culture. While she has much experience in covering top entertainment news stories, she aims to share her everyday life experiences, old and new, with other women who can relate, laugh, and love along with her. Follow Char on Twitter @charjpatterson, Instagram @charpatterson, and keep up with her journey at CharJPatterson.com .
ItGirl 100 Honors Black Women Who Create Culture & Put On For Their Cities
As they say, create the change you want to see in this world, besties. That’s why xoNecole linked up with Hyundai for the inaugural ItGirl 100 List, a celebration of 100 Genzennial women who aren’t afraid to pull up their own seats to the table. Across regions and industries, these women embody the essence of discovering self-value through purpose, honey! They're fierce, they’re ultra-creative, and we know they make their cities proud.
VIEW THE FULL ITGIRL 100 LIST HERE.
Don’t forget to also check out the ItGirl Directory, featuring 50 Black-woman-owned marketing and branding agencies, photographers and videographers, publicists, and more.
THE ITGIRL MEMO
I. An ItGirl puts on for her city and masters her self-worth through purpose.
II. An ItGirl celebrates all the things that make her unique.
III. An ItGirl empowers others to become the best versions of themselves.
IV. An ItGirl leads by example, inspiring others through her actions and integrity.
V. An ItGirl paves the way for authenticity and diversity in all aspects of life.
VI. An ItGirl uses the power of her voice to advocate for positive change in the world.
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Less & Less Of Us Have Close Friends These Days. Why Is That?
German philosopher Friedrich Nietzsche once said, “It is not a lack of love, but a lack of friendship that makes unhappy marriages.” At close to two decades of working with married couples, I agree with this man 1000 percent. It’s actually the main motivation for why I once penned, “Are You Sure You're Actually FRIENDS With Your Spouse?” because, the reality is, if you’re not friends with the person who you vowed to share every aspect of your life with, for the rest of your life, it’s going to be very difficult (if not damn near impossible) to honor that level of commitment. Without question, I will now and forever die on the hill that if you like your partner, you can make it through the not-so-in-love-right-now moments. Vice versa? Eh…not so much.
A basis for why I feel this way? Another quote immediately comes to mind. Famed author Jane Austen once wrote: “There is nothing I would not do for those who are really my friends. I have no notion of loving people by halves, it is not my nature.” You know, back when I also wrote “10 Things You Should Absolutely Expect From Your Friendships” for the platform, I shared that some of the traits of a friend — a real friend — include loyalty, honesty and compassion. And if you can’t say that your spouse is this way (as they say the same thing about you), chile…what is y’all doin’ over there?
So, why am I talking about marriage when this article is supposed to be about friendship? It’s because, something that life has taught me, kinda sorta the hard way, is we should vet potential friends — especially close friends — almost like we would a spouse.
And if you keep reading, I think you’ll get why I framed the intro in the way that I did.
Why Friendships Are Still Hella Essential
GiphyOkay, so before I get into why it seems that people have fewer friends than they ever had before, let me just say that, even as an ambivert who enjoys my own company and has absolutely no problem with being alone a good amount of the time, every personality type needs friends. That’s not just my opinion;science makes it a fact. Not only do studies support thathealthy friendships help us to feel more satisfied with our lives, but they can also reduce our chances of experiencing depression, stress, and anxiety and they increase longevity overall.
This is why — without going too deep because it’s kind of another topic for another time — it’s important to not allow past hurts and disappointments from former friends (or folks you thought were your friends) to cause you to build up walls as you declare that you don’t need anyone. When you do that, all you’re really doing is working against your own health and well-being. The saying that “no man (or woman) is an island”? It is absolutely true.
That said, even if it’s just a couple of people, make sure that you’ve got individuals in your life who you can call a friend and, in turn, they can say the very same thing about you, okay?
Are All of Those People Your Actual Friends? Or Do You Just Happen to Know a Lot of Folks?
GiphyAight but what if you happen to be someone who swings on the other side of few? Meaning, if someone were to ask you how many friends you had, you’d quickly declare that you’ve got too many to count. Listen, not to patronize or anything yet, but whenever I hear folks (especially if they are over 35) say something along those lines, it takes me back to high school — a time when so many of us thought that so long as we knew a ton of folks and/or we were popular, clearly, we had many friends.
Wisdom and pure ole’ dealing with humans on a consistent basis will teach you that an article that I wrote a few years back for the platform has a title that is spot-on: “According To Experts, We Only Have A Few Friends — Here's Why.” According to it, the average American (based on a survey that was conducted) has somewhere around 16 friends. Oh, but wait. Last fall, I wrote another article for the platform entitled, “What's The 'Five Friendship Theory' All About?” According to it, if you’re someone who takes the word “friend” and the responsibility that comes along with it very seriously and quite literally, as an adult, you can probably only maintain about five close friendships.
Why? Well, that brings in another article that I once wrote: “Life Taught Me That True Friendships Are 'Inconvenient.'” Chile, I don’t know about y’all but my friends know that if I call you that, you can call me in the middle of the night, and you can have money towards your rent (I’m not your mama but we all have hard times sometimes) and I’m gonna have your back in a way where you’ll wonder where you stop and I start — and no, I don’t have a lot of bandwidth for a ton of those people.
Okay, but what if you’re someone who is like, “I know that I have more than 16 and definitely more than five friends, no question”? The next thing that I would encourage you to explore is a theory by Aristotle (check out “According To Aristotle, We Need ‘Utility’, ‘Pleasure’ & ‘Good’ Friends”). Without even realizing it, many of us have people who we use the word “friend” for when…it’s kind of like how social media apps say “friend”: we’re familiar with one another and enjoy some of the same things, we might even have some of the same goals; at the same time, though, we’re not “all-encompassing friends.” We just get along really well at work (utility friends) or like to go to brunch at the same spots sometimes (pleasure friends).
Taking all of this into account, are you sure that you have a ton of actual friends? Or do you just happen to know a lot of people and you use that word for the lack of having another?
And that brings me to my next point.
There’s A LOT of Space Between “Friend” and “Enemy”
GiphyIf you read a lot of my friendship content, something that you will notice me saying quite a bit is that there is quite a bit of space between friend and enemy. It needs to be mentioned, as often as possible, because there are some people who get offended if you don’t consider them to be a friend — and that is unfortunate. I say that because the conclusion shouldn’t automatically be that they are your enemy just because “friend” isn’t what immediately comes to your mind.
They can be an acquaintance. They can be “cool people.” There is someone in my life who, while we’re not friends in the traditional sense, we are each other’s confidant; years ago, we agreed that we would be the place to tell each other whatever and it would stay between us — that is the main purpose that we serve in each other’s lives. Some people, you may consider to be spiritual family in the sense that you care for them and have some deeply profound things in common and still, they are not exactly a friend (I mean, a lot of blood relatives aren’t “friends” with each other).
All I’m trying to say here is we’re all too old now to only put folks in two boxes when it comes to this particular relational dynamic: friend or enemy. So, take some time out to seriously reflect on what you consider the various people in your life to be. I can promise you from personal experience that the sooner you know and the clearer you are, the easier it will be on everybody — because needs and expectations will be clear to you (and them once you articulate them) too.
What Got Folks to Having Less Friends? The Pandemic Plays a Significant Part.
GiphySo finally on to what inspired this piece to begin with. A part of it was an article that was published last year by Big Think entitled, “Americans more than ever have no friends. Here are 5 steps to make more friends.” Another was something that The New Yorker published back in 2021; it’s entitled “What COVID did to friendship.” Y’all don’t have enough time and I don’t have enough space to get into the fact that, just because the media may be talking about it less, that doesn’t mean that we’re not still in a pandemic.
In fact,one article stated my thoughts on it quite well when it said, “The real question, then, is not whether COVID is still a pandemic, but how much COVID illness and death are we willing to accept?” SMDH. And one of the things that has come with experiencing COVID is an interesting type of PTSD: detachment. There are plenty of articles out here to support the fact that my saying that is not merely my opinion.
Even according to the American Psychological Association, loneliness damn near skyrocketed, especially during lockdown and, unfortunately, a lot of people have not recovered from it. That’s why it did not surprise me at all when I read that more than ever, many people do not consider anyone to be a best friend; fewer people are relying on friends for any type of real support, and there is a semi-steady decline in people having friends, especially quality friendships, overall.
In fact, as far as close friends go, currently, close to 50 percent of Americans say that they only have three or fewer, and a relevant contributor to that was what the pandemic revealed as far as people’s proactive participation in other individuals’ lives (I actually read that young women were the ones who lost touch with friends during the peak of the pandemic the most). I also thought it was interesting that some studies cite that 12 percent of Americans say that they don’t have any friends at all.
Is the pandemic the only cause? No. So are things like people working more hours and spending more time online than they probably should (which also increased due to the pandemic, though). To that, Teen Vogue once published, “Social Media Is Impacting IRL Friendships” and Healthline once published, “Social Media Is Killing Your Friendships.” Then we also have to factor in having families of our own which can also take up a lot of time, and that sometimes can cause us to forget to nurture our friendships; so, before you know it, they fade to black. Not due to a fallout or anything, just…life.
And all of this? Some people are saying that it has led to what is known as a “friendship recession.” A huge flag about that is there are reports that a drop in close friends can cultivate a type of loneliness that is just as health hazardous as smoking a whopping 15 cigarettes a day. Not good, y’all. Not. Good.
Quality over Quantity Is Key. Just Make Sure That You Have a Friend or Two.
GiphyOkay, so what is my overall point? That’s a fair question. Just like sometimes “life life-ing” can make us forget to tend to our friendships, if you don’t stumble across content like this, you might not even realize that you’re feeling mentally stressed, emotionally strained, or super isolated and it’s all because you need to prioritize your friendships — because your mind, body, and spirit need them. Again, science has proved it.
At the same time, if, like a client of mine, you find yourself getting a little bit paranoid because you have noticed that over the past several years, your close friend count has been far less than what it used to be, this article proves that you are absolutely not (pardon the pun) alone. Honestly, there’s nothing wrong with having a very small circle of friends because quality is gonna beat out quantity every time; you just need to assess when it happened and why so that you can be sure that you are choosing it to play out that way and it’s not due to some underlying cause that you hadn’t taken into consideration — until now.
An Italian priest by the name of Thomas Aquinas once said, “The happy man in this life needs friends.” Even if it’s just one or two people, please make sure that you have folks who aren’t just your friend but your very close friend. You need them. They need you.
Everyone else, figure out where they fall and nurture accordingly. Life is a lot. We all get by with the help of our friends. Real talk, y’all. Thank goodness for them.
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Featured image by jose carlos cerdeno martinez/Getty Images