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.
When discussing the topic of raising children, discipline is often the first thing that comes to mind. Children need discipline. Full stop. But what is discipline? And how do we draw the line between discipline and revenge?
The origin of the word "discipline" can be traced back to the Latin word "disciplina," which means "instruction" or "teaching." Over time, however, discipline has come to be synonymous with punishment, with parents relying on shame, fear, and/or physical pain to curb undesirable behavior.
Teaching takes time, so nipping it in the bud in whatever fashion parents deem necessary (within reason) has become the norm. But is this what’s best for children? And when does it become less about curbing undesirable behavior and more about getting our licks back for offenses we feel our children should know better to do?
In my work as a parenting coach, I’ve often heard parents say, “I asked him nicely three times before spanking him. He didn’t stop doing it until I did, so clearly talking doesn’t work.”
And the parent isn’t wrong. Talking often doesn’t work the first, the third, or the even the 10th time. And the reason is directly tied to brain development.
Children cannot and do not process information the way an adult can. Auditory processing is not fully developed until a child is 14 or 15 years old. And even then, if a child has auditory processing delays or Auditory Processing Disorder (APD), they may always struggle with processing auditory commands. According to Susie S. Loraine, MA, CCC-SLP, the term auditory processing refers to how the brain perceives and interprets sound information. Several skills determine auditory processing ability—or listening success. They develop in a general four-step hierarchy, but all work together and are essential for daily listening.
Without this understanding, discipline can easily become revenge because parents will then view their child’s misdeeds as a personal slight. Instead of teaching them to do better, parents now want to show them the consequences of not doing better. This is why it's imperative for parents to discern between discipline and revenge to maintain healthy relationships with their children.
5 WAYS TO DISTINGUISH BETWEEN PARENTAL GUIDANCE AND RETALIATION:
Understanding The Intent
Discipline is rooted in love and concern for the child's well-being. It focuses on teaching lessons and helping children understand the consequences of their actions. Conversely, revenge-driven actions stem from a desire to inflict pain or punishment as payback for perceived slights or disobedience. Parents should reflect on their motives before taking disciplinary actions. Ask yourself whether your intention is to help your child learn or to make them suffer for upsetting you.
Example: If a child accidentally breaks a valuable item, a disciplinary response would involve discussing the importance of being careful and working with the child to come up with a way to replace or fix what they’ve broken. On the other hand, a vengeful reaction might involve yelling, harsh punishment, or bringing up past mistakes to intensify guilt.
Maintaining Emotional Regulation
Effective discipline requires parents to remain calm and composed, even in challenging situations. It's natural to feel upset or frustrated when children misbehave, but responding with anger or resentment can escalate the situation and blur the line between discipline and revenge. Before addressing the issue, take a moment to breathe and collect your thoughts.
Example: If a child cannot follow instructions, a disciplined response would involve calmly explaining why their cooperation is necessary in working with the child to accomplish the goal. Conversely, a retaliatory response might involve shouting, name-calling, or resorting to physical punishment out of anger.
Promoting Growth and Learning
Discipline should always aim to promote growth and learning. It involves guiding children toward making better choices and understanding the impact of their actions on themselves and others. Effective discipline strategies include positive reinforcement, setting clear expectations, and providing opportunities for reflection and growth.
Example: If a child repeatedly forgets to complete their chores, a disciplinary approach would involve discussing the importance of responsibility and finding solutions together, such as creating a chore chart or setting reminders with Siri or Alexa. In contrast, a revenge-driven response might involve imposing overly harsh punishments or belittling the child, which can undermine their self-esteem and hinder their ability to learn from their mistakes.
Momo Productions/Getty
Building Trust and Communication
Trust and open communication are essential components of a healthy parent-child relationship. Discipline should strengthen this bond by fostering trust and encouraging children to confide in their parents without fear of judgment or retaliation. When children feel safe and supported, they're more likely to accept discipline as a form of guidance rather than punishment.
Example: If a child admits to breaking a rule or making a mistake, a disciplined response would involve listening to their perspective, discussing the consequences of their actions, and working together to find a solution. Conversely, a retaliatory response might involve accusations, blame, or shutting down communication, which can erode trust and damage the parent-child relationship.
Seeking Professional Guidance
Parenting is a learning journey, and, disciplining children is a delicate balance between guiding them toward responsible behavior and nurturing their growth. By understanding the intent behind our actions, maintaining emotional regulation, promoting growth and learning, building trust and communication, and seeking professional guidance when needed, as parents we can help our children built on love, respect, and understanding.
Let’s make things inbox official! Sign up for the xoNecole newsletter for love, wellness, career, and exclusive content delivered straight to your inbox.
Featured image by Courtney Hale/Getty Images