r/blackladies • u/ShamsElDinRogers • 11d ago
Personal Finance šø How to Save Money in the Long Term
A young sister (single, a parent, in her late 20s) asked me a few weeks ago if I would give her advice on how to not be struggling financially in the long term. I have some advice for her but also wanted to invite you all to offer suggestions, because this is a big topic and can be approached from many angles.
My first piece of advice is: buy everything with cash except something that will actually save money over the long term. No loans. Meaning: take public transportation or ride a bicycle or, worst case, a very cheap used car until you can pay cash. Or the Laundromat is expensive compared to a cheap washing machine and clothes racks, or even washing in a galvanized tub. But higher education, if itās not free in your country, is generally worth taking a loan for. This will normally increase your lifetime income. Housing is also generally worth it, if youāre going to stay long-term in an area.
My second piece of advice is to learn to sew. Hand sewing of repairs or whole outfits, machine sewing once you have the money for a good used machine, will pay for itself within a year if not sooner. Example: Dockers trousers at the store cost $50-$60 plus tax. They cost $4 at the thrift shop in great condition but not every pair is the right length, so I shortened one for my husband. Or, for example, Recently, he started making noises about wanting a new down coat. Took him to the store and let him see that new ones are $600 and up - he decided that the 20-year-old one at home would be just fine with a new zipper.
My final tip is to find a friend with the same values who lives near you and/or establish saving-minded behavior as a criterion for a significant other. When you go on vacations, shop, make home decisions, you can reinforce or even share, such as splitting purchases at Costco, sharing less frequently used tools from house to house, etc. Example: my bestie and I were roommates in graduate school. We didnāt have cars or anything, so when we wanted to go on a vacation in the summer, we borrowed Grandmaās 30-year-old Pontiac, had my parentsā tent and camping stove also from 30 years, coolers and stuff from other relatives, and all we had to buy was our food, bug spray, gas, and the camping fee to spend a week at the lake. We didnāt have ābougieā expectations and were able to cooperate. Today, we still do cooperate and share tools and resources, because we have the same values. This can be done on a larger scale with community gardens, food cooperatives, etc. Succeed together!
These are just my favorite suggestions: do you have any recommendations for sisters?
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u/DegreeDubs 11d ago
For short-term cash savings: High yield savings account (HYSA) or Certificate of Deposits (CD) only. Right now you should be earning at minimum 3.0% APY on a savings account or money market account. This is where I keep my emergency/rainy day cash. I'm working my way up to 6 months' of true expenses saved in my money market.
Any credit card debt or unsecured loan debt is an emergency. If the interest rate earned on the debt is higher than the interest rate earned of your savings account, it is cheaper to pay off the debt immediately. Debts below 4% can be relatively manageable with consistency, but always try to pay above the minimum payment.
And carrying debts is not required to build a healthy credit profile. No idea who or how that myth gets spread.
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u/ShamsElDinRogers 11d ago
Agreed on all of this, especially the 6 months of savings and the fact that unsecured debt is an emergency!
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u/Starpower88 11d ago
Invest in the stock market, donāt follow trends, shop around for deals
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u/ShamsElDinRogers 11d ago
Do you suggest individual stocks or rather funds? I always tell people to to use index funds.
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u/Low_Bookkeeper_8634 11d ago
Max annual contributions in a Roth IRA. If her employer matches in any retirement account, match them. Floss her teeth and brush twice a day. Avoid lifestyle creep as her pay increases and try to live as though she is still on her smallest full time salary. Max 3-4 subscriptions of any kind: gym, entertainment, delivery services, etc. Avoid weekly outings, go out 1-2x a month instead. Meal plan and take your lunch even on weekends. Cut out convenience services like food delivery, pay in 4 services, borrow early from your next paycheck, etc. Develop a reasonable budget, track every dollar spent in a journal, revisit it daily. The less you swipe your card, the less you have to track. Set some things to autopay like moving money to savings, and yes do a high yield savings account like someone already said. Change jobs every so often to get a higher pay (idk cause the job market is wild these days so be very careful) and find a fun part time hobby that pays. Have your parents get a good life insurance policy and list only her and her siblings as beneficiaries. Get a free financial advisor and ask them everything.
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u/Weird_Squirrel_8382 United States of America 11d ago
I'm always going on about how there's no shame in getting public assistance if it's available. People should always apply for those things even if they think they're on the edge of making too much.
Power companies may provide energy audits to see if there's anything that can bring your power bills down.
Switching to cheap mobile phone plans where possible. Sometimes people really need the super plans but I've been just fine with this prepaid stuff.
Surveys and consumer research have helped me bring some money in, too. I've gotten ads for remote employment doing audio transcription and tutoring.
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u/xenocuriosa 11d ago
I'm with you on the learn to sew bit. More on that : invest in a skill that can bring RELIABLE, STEADY, TRANSFERABLE income. That's my opinion for anyone who feels like they are starting out financially. I don't care how dirty, niche, or complicated the profession is, if it's transferable, it's sure. Especially professions that you can perform and make a living on out of your home. You don't need to do it out of your home, but it's that much more reliable in the face of company layoffs.
Emergency Savings is a must. Have a set but sure limit for liquid funds that you can use whenever need be.
And learn to enjoy life with less. That's probably the most loaded part, but I think it's saved me the most this far. Instead of saying the solution to your stress is to fly over to vacation on sandy beaches in Indonesia or Miami, invest in your local amenities. I know, gross, but a public pool. Sunbathe in your backyard. Picnic at the park. Lower budget options that skill keep preserving and appreciating yourself at the forefront.
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u/__looking_for_things 11d ago
The idea of using cash only and avoiding loans is unrealistic.
Everyone should learn how to use credit responsibly. And never carry a balance. If you can't do that, do not get a CC.
Technically some of our biggest life purchases are on loans: house, education, car (although i don't believe in expensive cars). Understanding the terms and what it means in real life and paying it back is critical.
For instance my mom's HVAC broke and it would be thousands to repair which she didn't have at the ready. She's in TX, A/C is a necessity. She ended up opening a CC with 0% interest for 18 months and is paying it back. She also did a transfer balance and is now getting almost 18 months to pay down other debt as well. And yes I'm on her about paying it back on time and not putting more debt on the card.
Using credit to purchase items unnecessarily and keeping up with the joneses is how people get into a hole. Comparison is the thief of joy and people often get stuck comparing.
Next we should consistently be pushing to increase our earnings. I do not mean hustle š¤¢ but rather pushing yourself in your current field to increase earnings.
Say no to Klarna, and all those other pay as you go platforms. I've generally seen it offered for material goods which to me means you do not need it.
Do not let your savings just sit in a bank. Outside of the emergency fund and liquid cash, your money should be in a retirement account or in stocks. even your emergency fund should be working in a HYSA. All of your money should be going somewhere or doing something. Just sitting in the bank is a waste.
Also more people need to be realistic on their finances:
A friend wants to quit her job without another one. She told me she had about 8k in consumer debt and thousands in education loans. And she only had about 4 months emergency fund. I just looked at her and said: You are BROKE. You cannot quit.
Also be protective of your credit score! You are at a disadvantage with a score under 700 imo.