You can’t budget your way out of poverty

I recently read a study about financial literacy that was very eye-opening, but not totally surprising. 

According to a 2019 study conducted by the TIAA Institute, the #1 personal finance topic that Black Americans are most knowledgeable about is… 

Borrowing and debt management.

This makes sense when you think about the fact that Black Americans have a significantly higher debt-to-asset ratio than white Americans.

It’s heartbreaking that Black people have way more experience understanding debt than positive money habits like saving and investing.

It makes me think back to my college days, when I racked up thousands of dollars in credit card debt and 6 figures in student loans.

At the time, I felt so ashamed and guilty about my finances.

But then I remembered, I wasn’t in this spot because I was lazy, or deliberately making poor decisions about my money. 

We live in a system that is literally designed to see us fail — as women, Black people, other people of color, queer folks, disabled folks, and other members of historically excluded communities.

On top of that, we traditionally haven’t been exposed to the education we need to help us make better choices with our money.

But there’s hope — and we can take matters into our own hands.

First, we need to learn how to manage our money and spend time looking at our finances on a regular basis.

We teach some of these strategies inside We Should All Be Millionaires: The Club.

You can also read this Bulletin post where I share some actionable steps to get you on the path to financial literacy. 

But simply learning how to manage your money might not be enough, because…

You probably also need to start earning more

You can’t save or invest if you’re not earning enough to cover your basic needs.

You can’t budget your way out of systemic financial setbacks. Money won’t magically appear in your checking account just because you’re looking at it every day. 

This is especially true for Black and brown folks, who have consistently earned less than cis, straight, white men for centuries.

There are many paths to growing your income, but the one with the lowest barrier to entry for folks in historically excluded groups is entrepreneurship.

This path doesn’t force you to cut back or spend less on the things that bring you joy — it shows you how to create more for yourself: more opportunities, more open doors, and more money.

Some other ways you could increase your income? (Because I know entrepreneurship isn’t for everybody…)

You could work your way up the corporate ladder, negotiate for a salary raise, switch careers to something more lucrative, or start a side hustle. 

And once you start making more money, you can begin to ask yourself:

How can I use this extra income in a way that will benefit me in the long run?

What’s the easiest thing I can start investing in today?

How can I make this money work for me?

[First Name], no amount of budgeting or coupon-cutting can take you out of crippling debt or a less-than-ideal financial situation.

But when you increase your learning AND your earning, you can be well on your way to millions.

xo,
R

P.S. You can always learn more, and you can always earn more. Don’t think of this as a two-step process – learning and earning can happen simultaneously and continuously. You should always be learning, and you can always be earning. 

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