January is a time where a lot of people start, and end, their New Year’s resolutions. One of the most common resolutions is to create a financial budget and start, in earnest, to save. Author and financial educator, Berna Anat works with first generation and BIPOC populations on how to save, pay off debt and make the most of your money.
Anat also cofounded New Dimes, a network for first-generation bread winners.
She says anytime is a good time to budget, but watch out this time of year for a financial hangover – the idea that you feel bad because of excess end of the year spending.
“I gotta make this resolution because … I did awful at the end of the year. Everybody does financially awful at the end of the year,” Anat says. “If you redo your budget, try to go into it with as little guilt and shame as possible.”
Here she answers community questions on money and finances:
Can I trust Google to teach me how to budget because my rent is HIGH! How much should I be spending and saving?
The general advice you might find through Google is the 50/30/20 rule. That rule says … 50% [of your budget] should go to your expenses. I call these my ‘come get me bills’ because if I don't pay these things, someone's gonna come get me. That includes your rent, insurance, bills. And then 30% of your money should go towards your wants: entertainment and fun things you don't necessarily need for survival. And then that last 20% should go towards your financial goals (savings, investing and paying down debt).
The problem with the 50/30/20 rule is that it makes people [feel] like, ‘Oh my God, I'm broken. Something's wrong with me.’ But please know, when I was on an aggressive debt payoff journey, that 20% became like 40%. I had to go all the way down on my regular expenses. My percentages never stay in one place. They always flex according to where I live, what I'm doing, what my priorities are. It's a good place to start, but be gentle with yourself.
How do I not internalize being a moral failure for living paycheck to paycheck? Even trying to think about money, or how to save, in survival mode doesn’t feel possible.
Debt is a tool that us living in this monopoly version of capitalism [has] to leverage. It is set up for us to have to choose debt and then pay a lot for that debt because of interest rates [and] be in debt for a long time and actually pay way more out of our nose because we had to take that debt. And also, the system itself is set up so that you feel bad for having chosen the only thing that was available to you.
I wanna give this person a hug and tell them that you are doing your best to survive. You're doing your best with the tools that you're being given, and by the way, the tools suck and they're not meant for you to thrive. So do what you can to shower the moral shame off because these debt companies absolutely are using no kind of moral compass to deal with you. It's not worth the energy.
I’ve left a lot of money on the table because I was scared to negotiate for a higher salary when I took my job. And I don’t know how to ask for one now. Please help!
I am not necessarily ‘negotiation queen,’ I'm thinking about one person who is an incredible resource and their name is Mandi Woodruff. One thing I learned from Mandi is when you are negotiating, and you're trying to get a higher wage for a job you already have, you want to make the case irresistible.
[Set] a goal date for yourself, like six months from now, that you are going to be officially asking for that raise. Let your boss, or whomever know: I [want a raise] for these reasons and in six months I'm gonna give you a case as to why I deserve that. Then spend that period of time building up your case, basically creating as much of a paper trail of the impact you make in that company as possible. You're putting together data on events that you threw, how that helped the company's bottom line. You're putting together testimonials on customers who thought that you were the best barista ever. And also checking in with your boss along those six months so that by the end it doesn't feel like you're making a case to the boss. It feels like you and the boss are making the case to their boss. If you help your boss make it easy to present your raise to somebody higher than them, that could see a lot of success.
Anat says the beginning of the year is also a great time to work with financial planners (FP). She recommends finding a certified FP that is fee-based, not commission-based. And if you’re looking for inclusive FP’s that have experience working with BIPOC and first generation populations, she has a recommendation.
“I love XY Planning Network [because] you can also filter for your life,” says Anat. “Maybe you are mid-career and you're trying to start a family. Maybe you are looking for someone in a specific ethnicity set and you want someone who understands like queer family building.”
Anat says for many, these barriers to wealth building are intentional, but the resources to start exist and are out there.