Going From Broke Phi Broke to Financially Woke
“When one decides to leave Broke Phi Broke behind, the first step is improving their financial literacy!”
Broke Phi Broke
Net worth = Your Total Assets – Your Total LiabilitiesBecoming a member of Broke Phi Broke is incredibly easy. When you sign up, you realize this group has no standards or restrictions at all; men and women, regardless of their background, are encouraged to become members. As you may recall from the Kanye West video, the group’s chant is ” “We ain’t got it. Broke, Broke, Phi Broke! We ain’t got it. Broke, Broke, Phi Broke!” All members of this group have a negative net worth. While in college, being broke is usually accepted as a harsh reality. But once we graduate, some of us make poor decisions that keep us in the not-so-exclusive fraternity indefinitely. Some poor decisions are: buying more car than we can afford, living beyond our means, and becoming best friends with credit card companies. If you are a member of this fraternity, do not feel ashamed. Most Americans are.
Lack of an Emergency Fund
“An emergency fund is where you stash cash for an unplanned expense, such as a car accident or a fall that sends you to the hospital.”According to a recent report from Bankrate, most Americans cannot come up with $1,000 if an emergency occurs. If this is you, take a look at some ways below to build that emergency fund!
List of Ways to Build Emergency Fund
- Analyze your monthly subscription services (Spotify, Netflix, Cable, etc.). If one or more services are being underutilized, consider eliminating them from your budget.
- Review your phone bill and consider moving to a plan with less data (Do you really need unlimited data?).
- Get a side hustle. In today’s gig economy, getting a side hustle is easier than ever. Side hustles like Uber, Lyft, WeGoLook, etc. do not require any specialized skills.
- Become a freelancer and monetized your specialized skills (writing ability, editing, drawing, etc.) for a price.
- Read personal finance blogs to discover more ways to cut expenses/and or increase your income. When you read these personal finance blogs, you will also increase your financial literacy.
- Throw the money saved or additional income earned into a savings account. You get bonus points for depositing it into a black owned bank!
Becoming Financially Woke
“Being financially woke means you understand basic personal finance terms and you are able to apply those principles to your financial life.”To become financially woke, start with learning the basic terms of personal finance. At the beginning of this post, the term net worth was mentioned. It is important that you calculate your net worth; it is a number that lets you know where you are financially. After you calculate your number, don’t stop there. Learn what the terms savings rate, asset, and liabilities mean. Savings Rate: The percentage of your income you save annually. For example, if you make 30,000 and save $3,000, your savings rate is 10%. Asset: Something that you own that has been deemed valuable by society (savings account, investment account, home, etc.) Liabilities: A liability is something you owe to someone else (credit card debt, personal loans, student loans, etc.)
*To learn more personal finance terms, read at least one personal finance blog a week!*