The Woke Woman’s Guide To Building Generational Wealth
Try to escape a conversation about money. Whether it's a new poll showing that blacks aren't prepared for retirement, actress Kerry Washington urging women to be "financially literate," or Jay-Z rapping about generational wealth - conversations about money are all around us.
Honestly, these are topics that I've avoided like Trump speeches for years based on bad financial choices from the past. But burying my head in the sand won't change anything and, the truth is, black women are winning in business. It can't be said enough that we're the fastest growing group of entrepreneurs in this country and our businesses generate $51.4 billion in revenues. Those are the kind of numbers that motivate a girl to get it together.
That and my kids.
I want to give them a better life than I had and enough money to never have to struggle when I'm gone. So, how do I get there? According to financial advisor Lola C. West, who has been educating people about money for over 20 years, building the type of wealth that can be passed down to future generations is easier than we might think. In fact, a lot of it has to do with awareness and the right mindset.
The key to generational wealth is having awareness and the right mindset.
Fortunately, she's broken down some gems about building generational wealth that can strengthen our financial literacy IQ exponentially, whether we're new to the conversation or just brushing up. So, in the spirit of sharing, here's the Woke Woman's Guide To Building Generational Wealth!
It Never Too Late To Start Saving
It's never too late to start building wealth. First, you have to know how much it costs to be you. If you spend more than you make, then you have to look at your daily habits and create a budget. At least, 10% or more of your income should go into a savings that you don't touch, and it's critical to have at least six months of living expenses saved up in case you lose your job.
Also, the first day you start a job, take out the max (in 2017, $18,000 per year, and $24,000 for 50 years of age and over) for your retirement account. By taking out the maximum amount, it could put you into a lower tax bracket, which could save you more money.
If you're self-employed, put at least 30% of what you earn away for taxes.
You could also speak to a financial advisor about setting up an SEP IRA. A Simplified Employee Pension Individual Retirement Account allows entrepreneurs, or anyone with freelance income to open an account and make tax-deductible contributions. Like a traditional IRA, the money in a SEP IRA is not taxable until withdrawal and business owners can contribute up to 25% of income, or $53,000, whichever is less.
Educate Your Kids About Budgeting and Good Money Habits
We have to look at the conversations we have at home about money and what we are teaching our children. For example: giving a child as young as five years old a $5 weekly allowance can build their understanding of money. 1/3 of that money could go to a savings account, 1/3 could be for philanthropy, and 1/3 for spending....NO CANDY!
By taking a child into the bank, they understand this is an institution. An ATM does not leave that impression. Explain that if you buy something with a credit card today, a bill will be at your doorstep in 30 days, and if you don't pay on time there are late fees. You can also give them things to budget. For example: give them the amount of money you plan to use for back-to-school clothes and let them help make the list based on how much you have to spend.
Invest In Your Child's Future
Also, establish a 529 College Fund account when your child is born, and every birthday, Christmas, and holiday that your child gets money - at least 50% of it should go into a savings vehicle. If you have significant assets or a child with special needs, establishing a trust with the support of a qualified estate attorney can be a powerful way to foster the longevity of assets and/or protect the welfare of your child throughout their lifetime.
Multiple Streams of Income and Diversifying Investments
I always use the analogy that if you're in an elevator that has three cables and one of them breaks, the other two will still hold it up. It's the same with multiple streams of income. If one stream doesn't work, the others should help balance. It's also the strategy behind diversifying investments between three asset classes: stocks, bonds and cash.
Stocks are the equity that you buy when a company is selling shares. You can buy one, two, or many. Bonds are considered fixed income. For instance, a company says if you give me $1,000, I will pay you 4 percent interest for the year. At the end of the year, I will give you back your $1,000 and you will have received $40 for letting us use your money.
Cash is the money you put in a bank that they pay you interest on. Interest rates for savings accounts are low now, but save anyway! You continue to earn because of the compounding effect of interest, which is interest on top of interest earned when you don't withdraw your money.
Property Investment
People often ask if buying a house is still a good investment? Yes. Because it allows you to build equity. You build equity in a house as you pay down your mortgage. The less you owe on the property, the more equity you have. When you have equity in your home, you can "borrow" money against it - we call that refinancing your home. The danger is mortgaging your home to its market value. You will then have no equity in your home. Property is one of the main assets that are passed from generation to generation.
Deeds And Setting Up A Will
A deed and a will are very important. A deed establishes ownership of a piece of property. If you and your partner buy a house, it's important that both names be on the deed so there are no issues when transferring the property to someone else. Because of the complexity of federal and state laws, we recommend working with a qualified estate attorney to draft your will to lessen the possibility of family conflict. Be specific in terms of what you want each child to have, even children you don't wish to leave anything, so that your will won't be contested. For example: each child should be mentioned by name and left something, even if that sum is $1, so it is clear that the child was not forgotten, and he or she can't contest your will.
Study Wealth Building
One of the best ways to build the wealth you desire is research. Attend workshops, study online, find a mentor, etc. There's a great book called 50 Billion Dollar Boss: African American Women Sharing Stories of Success in Entrepreneurship and Leadershipthat I strongly recommend because it highlights how successful black women worked through the challenges of creating their businesses. When you look at generational wealth beyond dollars and cents, it's also our stories of resilience that we want to pass down to future generations.
Lola C. West is a co-founder and managing director at WestFuller Advisors.
Featured image by Shutterstock
- 7 Types Of Investments To Invest In - xoNecole: Women's Interest, Love, Wellness, Beauty ›
- Budget For Taxes When Self-Employed - xoNecole: Women's Interest, Love, Wellness, Beauty ›
- I Quit a Job During Covid And Survived - xoNecole: Women's Interest, Love, Wellness, Beauty ›
- Why Generational Wealth Is The Ultimate Form Of Securing The Bag - xoNecole: Women's Interest, Love, Wellness, Beauty ›
- Why Estate Planning Is The Secret To Building Generational Wealth In Our Community - xoNecole: Women's Interest, Love, Wellness, Beauty ›
- Generational Wealth Management: Home ›
- GENERATION WEALTH by Lauren Greenfield | International Center ... ›
- An Even Wider Generational Wealth Gap? ›
- Jay-Z's Pitch for Generational Wealth ›
- Don't Be Fooled: 'Generation Wealth' Is More About Wanting Than ... ›
- Lack of young homebuyers fuels generational wealth gap ›
- Generational Wealth Management Group - Home ›
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.
Let’s make things inbox official! Sign up for the xoNecole newsletter for daily love, wellness, career, and exclusive content delivered straight to your inbox.
Rihanna Talks Shedding Expectations And Finding Balance As A Mother
Since becoming a mother in 2022, Rihanna has defined parenthood by her terms and hopes to pass that sense of autonomy on to her children.
For Vogue China’s April cover story, Rihanna shared her perspective on raising her two sons with A$AP Rocky, and how she hopes to preserve her children’s uniqueness, devoid of societal expectations.
"The most beautiful thing...is that [children] come into the world with their own individuality and sincerity, without any logic or conformity,” she told the publication. “Which usually makes you feel that you must fit into a certain group."
The “Work” artist, known for her trendsetting style and captivating persona, expressed her desire to support children in fully embracing their individuality and encouraging them to be whoever they want to be. "It's really beautiful to see and I want to continue to help them navigate that and make sure that they know they can be whoever they want to be,” she says.
She continues, “They should embrace it completely, because it's beautiful, and it's unique. I love them just that way."
From shattering music charts to shaking up the beauty industry, Rihanna has forged a path that has since created the “dream” life we see today. One that she says has made her parents proud of.
“I’m living my dream,” she continued. “My parents were very proud of that because they just wanted me to be happy and successful. So, I think the key thing is to find some kind of balance. Yes, balance is important. Do this and you get the best of both worlds. You can write your own life the way you want, and it will be beautiful. Sometimes, you just need to let go of everyone’s expectations and start living your own story.”
Rihanna, who shares sons, RZA, 23 months, and Riot, 8 months, with rapper A$AP Rocky, recently shared her vision for expanding her family in the future in Interview Magazine.
When stylist Mel Ottenberg asked about the number of additional children she hoped to have, Rihanna replied, "As many as God wants me to have.”
"I don't know what God wants, but I would go for more than two. I would try for my girl,” she adds. “But of course, if it's another boy, it's another boy."
Featured image by Neil MockfordWireImage