Legacy is a complicated concept in the Black community—so much of our history and future is impacted by systemic inequality. So when it comes to building your own financial legacy, what’s the best way forward? According to some financial experts of color, a dual approach is key: while we’re keeping our eyes on efforts to combat macro injustices, being empowered in our personal finances can have a powerful effect on our lives, families, and communities. Ahead, some insights on building your financial legacy, with help from U.S. Bank.
One of the first steps towards protecting a financial legacy is building a nest egg for your future needs and goals. It’s easy to put savings on the backburner when you have ends to meet and bills to pay, but with consistency, even small steps can make a big difference.
Planning for retirement, for example, seems daunting, but it becomes a lot more manageable when you break the steps down into decades. If you’re in your 20s, it’s a great time to research the difference between the retirement plans available to you, whether that’s a 401K offered through your employer, or a broader IRA (much more amenable to freelancers and gig workers, for example). If you’re getting started at a later age, you don’t have to feel like you’ve missed the boat—but consulting with a financial planner can help you find your footing and lay the groundwork for a strategy that makes the most of your current situation.
Consulting with an expert is a worthy investment for many financial questions, from getting your ducks in a row for retirement to maximizing savings when filing your taxes to dipping your toe into investing. Don’t hesitate to consult an advisor through your bank or financial institution to get questions answered, or to be directed to other resources.
That said, you don’t need to call in the pros to tackle one of the most crucial tools to building a financial legacy. Keeping a detailed, written budget seems simple, but it can be a game-changer—not only wrapping your head around your finances, but also getting you set up to make impactful adjustments. Bust out a calculator, open up a fresh new spreadsheet, and make an itemized list of your regular income and expenditures, broken down by month, or by week if more helpful to you. Once you have an honest assessment of how your income and expenditures balance out, you’ll have a better sense of if and where, for example, you should cut back or aim for additional income (hello, overdue pay raise or sweet new side hustle!). This bird’s eye view of your financial health is also a natural stepping stone to evaluating your short- and long-term goals, such as saving for life milestones or paying off debt.
Ah, debt. When it comes to money goals, it’s one of the most persistent, all-too-relatable bugaboos. Yes, paying down debt is more often than not a slow-and-steady-wins-the-race type of proposition, and consistency is the key yet again in this arena. But there are steps that you can take to optimize your debt paydown strategy. Consider consolidating your debt to simplify your payment process, ideally by way of a low-interest card that offers a rate of 3 to 5 percent ideally by way of a low-interest card.
Also consider which approach to debt reduction—avalanche or snowball—will motivate you more. With the avalanche method, you focus on paying off debts in order of interest rate (from highest interest rate to lowest), and devote more of your resources to the highest interest rate while paying a minimum balance on the lower interest debts. The benefit? You’ll pay less interest over time, ultimately minimizing your financial output. With the snowball method, you pay off debts in order of their balance, starting with the smallest balance and working your way up. The upside of this method is that you’ll get the equivalent of a financial endorphins boost, via quicker satisfaction upon seeing a smaller debt paid off in full. As for which method is best for you, consider which one is more likely to keep you consistent. Remember: there’s no one-size-fits-all approach to individual financial goals.
One of the most literal symbols of financial legacy is a home—whether it’s a place to call one’s own, or an asset to pass down through generations, home ownership is a major milestone for many—one that has certainly not always been accessible to people of color due to discriminatory practices in lending and real estate.
No matter your financial situation, buying a home can be an overwhelming prospect, and so it’s understandable that it may be particularly daunting for those new to the process. Organizations like U.S. Bank are committed to empowering Black communities with resources, education, and expertise to carve out viable paths towards owning homes including financial education and partnerships with community organizations that provide home ownership fairs, counseling, and home retention support. Mortgage loan officers are also extremely valuable when it comes to navigating the complexities of first-time homeownership. For example, 62 percent of Americans believe that a minimum down payment is 20 percent, but that’s not always the case—in fact, the median down payment for a home in 2021 was 12 percent. Having insight on options like grants and private mortgage insurance can make the hurdle of a hefty down payment much more manageable, and a mortgage loan officer can help to demystify those options.
When it comes to financial legacies, the dreams are big, but the steps are small: stay consistent, keep your focus on your goals, don’t hesitate to ask for guidance—and pay any hard-won wisdom forward within the community.
Rachel Mosely is a writer and editor based in Brooklyn. Her work has appeared in Cosmopolitan, Seventeen, Elle, and more.