7 Expert-Approved Budget Tips I’m Trying Out as a Black Woman This Year
The adverse effects of COVID-19 are having a severe impact on the Black community, affecting everything from healthcare to finances. And for Black women in particular, trying to budget during the pandemic has been doubly difficult. The pandemic’s unemployment rate is higher for women of color than it is for their white counterparts. Those who are employed are likely to be on front line jobs; according to the National Women’s Law Center, one in three black women are essential workers, such as home health aides, retail salespeople, and childcare workers.
So, as a Black woman, it’s been a unique time for me to finally create a budget for myself. Between working remotely and going out less due to stay-at-home orders, I’ve been chipping away at saving money. And while I’ve always been able to gauge how much I should spend each month, it isn’t until recently that I decided it was time to track my expenses, too.
According to Bola Sokunbi, finance expert and founder of Clever Girl Finance, creating a cash buffer is essential to whether you’ll be able to weather a financial crisis. That’s been step one for me, considering before the pandemic, I didn’t have money saved up for emergencies. Given the unemployment statistics, that cash buffer even more important.
To identify ways to push forward during such unstable times, I consulted three Black women who specialize in financial freedom to share their money-saving tips for Black women during the pandemic. Here are seven tips that I plan on trying.
Make a zero-based budget
A zero-based budget operates on a simple formula: income minus expenses and savings equals zero. Anyssa Roberts, who started budgeting in earnest in 2016 after she was laid off from her job as a journalist, explains the zero-based budget ensures that your expenses match your income. This way, you’re making the most of your money without overspending.
“While I was paying off debt, if I added up my expenses and it was more than my income, I either had to make more money or take it out of my budget,” Roberts says.
Make a new budget every month before the month starts
“I start with copying the budget from the previous month, but then I tailor it to what specific expenses I have coming up, like an upcoming birthday, holiday, or one-off expense,” she says.
This habit has allowed me to set my intention for the month, so I can switch up which categories I should prioritize spending on, from entertainment to food and clothing.
Establish a Noodle Budget
Tiffany “The Budgetnista” Aliche, recommends creating a Noodle Budget, or a bare-bones budget that only covers necessities. This budget identifies the lowest amount of money you need monthly to survive.
“Someone you have to behave like a company and temporarily lay off or furlough your nonessential bills,” says Aliche, a financial educator who has helped thousands of women collectively save more than $150 million and pay off over $100 million in debt.
Track your expenses as they’re incurred
A budget can do double-duty if you track your spending while you follow it. Roberts says she checks her budget every day to do this, which only takes a couple of minutes with the budgeting app EveryDollar.
“Tracking your expenses tells you how much you have left to spend in each category, so you don’t overspend,” she says.
Tracking my expenses has allowed me to reconsider some underutilized subscriptions I forgot I’d signed up for. I canceled a few of these monthly subscriptions to make more room in my budget for other things, like takeout.
Opt for minimum payment amounts during tough times
While aggressively paying off credit cards is usually a good thing, Aliche doesn’t advise doing it during a recession. She explains saving is the most important thing you can do to prepare for an economic downturn.
Aliche recommends opting for minimum debt payments and putting the excess money toward your savings. Once your emergency account is fully funded, you allocate more money toward your debt.
Create an online-only savings account for emergencies
Saving is one of the best tools you can use to protect yourself during a rocky period. Aliche says a person should have at least six months’ worth of essential bill payments in an online-only savings account. She suggests using MagnifyMoney.com to find the best bank for you.
“The more you can save, the better, given the current uncertain economic climate,” Sokunbi says.
Call your service providers to ask for assistance
If you’re experiencing financial difficulties, be sure to communicate with your lenders and service providers to determine what assistance they can offer, Sokunbi says. Ask for help with lowering or freezing payments, lowering interest rates, and waiving fees.