“Don't be a fool with your Finances”
5 money myths you cannot afford to believe.
By EWI special contributor Lyndsae' Peele
Growing up in a marginalized community exposed me to many doubts, insecurities, and the lack of confidence to obtain success. One major high school for the entire county, 1 grocery store in my hometown, and very limited resources to assist students in navigating life after high school. Fortunate enough for me, my parents left their jobs and started a plumbing company at the beginning of my primary school career. Our family business has now become the gateway out of poverty for me, my siblings and generations to come.
The financial wealth gap is beyond tumultuous for minority communities. Generational poverty, lack of financial education, and misguided decision-making have caused minorities to become further away from creating generational wealth. We often hear the saying, "you don't know what you don't know." However, we also do not know what we think we know by listening to someone else who knows just as much as you.
We will explore 5 financial myths that plague the minority community.
Money Myth #1 Saving money is impossible while making minimum wage.
While it can be extremely difficult, this is not exactly true. It is not always how much we make, it is about how we spend it. The key to understanding your personal cash flow is creating a budget. In your budget, you will analyze your income and your expenses. Once you see your numbers, you can access the necessary shifts in spending that will need to occur to save. One way to do so is by separating your needs versus your wants. If you see a pattern of spending unnecessary money on your wants, ask yourself what can you sacrifice to reach a new savings goal? Test yourself with the 7-day challenge. If you see something that you want, wait 7 days to see if you still have the desire for this item. Another great way to also initiate the savings process on a limited income is by negotiating with your merchants. Create a habit to negotiate credit card interest rates, auto insurance, or internet bills, etc. at least once a year.
Money Myth #2 Homeownership is not attainable for people with a credit score of less than 700.
It is no secret that the path to homeownership can be daunting and emotionally taxing. Pre-qualification, increasing your savings, house hunting, inspections, and the list goes on. However, that process is a bit more challenging for minorities. We experience several disparities with appraisal values, lending malpractices, failed contracts, in addition to our fear of being rejected. We have been told “no” so often that we have internalized the narrative that homeownership is not attainable if you do not have perfect credit. However, with the right team and trusted advisors you can become a homeowner with a credit score as low as 620. Yes, that's right- you can own your home without spotless credit if you are matched with the right lender and the perfect loan product for you. FHA-approved lenders can work with you to obtain maximum financing with a score of 580 or better. Do not let your fear of credit get in the way of purchasing your first home!
Resource: https://www.hud.gov/sites/documents/4155-1_4_SECA.PDF
Money Myth #3 Investing is for 6 figure earners.
"I do not make enough money," "I have too much debt, "I can barely afford to contribute to my 401k," are all familiar responses that I receive when asking clients if they have any investment assets. We have attached the word investing with 6 figure plus earners and wealthy people. The reality is that ANYONE can invest as long as you have a bank account to distribute the funds and some form of income. Fintech has made it easy to learn with limited funding and a variety of options. Many apps allow you to purchase individual stocks as well as percentages of shares with as little as $5. As a newbie, you can explore Robinhood, Acorns, Stash, WeBull, and more. Youtube University can be your best friend in learning how to get started.
Money Myth #4 Life Insurance is only for the burial of a loved one.
For many of us, having life insurance simply means you have enough money to bury someone and that's if you have it at all. On the other hand, some cultures are generating wealth through sizable life insurance policies. In addition to covering final expenses, this financial tool can be utilized to pay off debt, replace income, pay estate taxes, leave charitable contributions, as well as leave an INHERITANCE for your heirs. As you create an estate plan for your assets, I encourage families to consider the possibilities that you would like your beneficiaries to have in your honor. There have been several businesses, college degrees, and real estate acquired from life insurance policies, do not leave your family behind the curve.
Money Myth #5 I cannot afford to start a business.
Often, we pass billboards or see thriving local businesses and we assume that it took someone with a ton of money to create it. Not so. Many small businesses have been created with $0 and a GOAL. Starting a business can be a long, emotional, yet fruitful journey if you have the proper support. While you may eventually need funding to expand or launch a particular item, you can start a successful business by monetizing your skillset and education. Whether you become a consultant, a freelancer, or even a personal assistant, all you have to do is START. Reward yourself with additional streams of income, the ability to create financial freedom, and even tax benefits by starting a business that you and your family can be proud of. Allow EWI and LEDC to support you on your business journey today.
Meet our contributing author, Lyndsae' Peele!
Lyndsae' Peele, MBA, PMEC™ is a strategic banking consultant and financial wellness coach. She is known as a disruptor of systemic racial disparities in wealth creation, homeownership, and entrepreneurship for people of color. She is an alumna of the illustrious Howard University and received her Masters in Business Administration from the University of Maryland Global Campus. Lyndsae' combined her years of banking experience and her passion for economic development to birth Kingdom Vision Consulting.
Kingdom Vision Consulting is a financial services firm that educates and empowers entrepreneurs of color to build generational wealth using 5 key pillars known as C.L.A.S.S; Credit Worthiness, Long Term Wealth, Asset Protection, Strategic Banking Relationships & Strategic Asset Accumulation. As a second-generation entrepreneur, she believes that the key to building a solid foundation for any business is through strategic financial decision-making and meaningful partnerships.
“Black & brown families deserve to inherit a legacy of wealth and tangible assets." –Lyndsae’ Peele
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