10 Personal Finance Tips for 40-Something Black Women

Being the first in my family to graduate from college, and having a family from a low-income background, I’ve had to learn a lot on my own when it comes to personal finance. I am still learning, but there are some great tidbits that I’ve picked up along the way (and with many of them, I wish I knew the information much earlier).

#1 – Your Annual Salary Should Be At Least Your Age in Thousands

I don’t remember who gave me this tip, but it makes sense. I remember that when I was 29, I was stuck in a rut career-wise and making about $28K/year. In my next job that I secured before I was 30, I made sure to ask for $30K/yr as a minimum.

As your age increases, so do your financial responsibilities (usually). Whether you are a college graduate or not, you should keep an eye on your income and always try to do better than the standard cost of living increase (which is usually between 1-2% per year).

#2 – Take Advantage of the Maximum Employer-Matching Benefit on Retirement Plans

I’ve worked a wide variety of jobs. Surprisingly, not all of them even offered employer-sponsored retirement plans. Others mandate that you contribute. However, the majority of them offered a 401(k) (or its equivalent), with a certain percentage that your employer would match. If that is the case, contribute the maximum you can to at least collect the full benefit of the employer matching. So for example, if an employer will match up to 5% of your elective contributions, contribute 5% or more. Why? Well because it is basically free money and it stays in your account, even after you leave that employer.

#4 – When Shopping for Loan Products, Go With National Providers

Although this is anecdotal evidence, I noticed that in Florida, it was much easier to get approved for a car loan than it was in Pennsylvania (some family members confirmed that this was their experience as well). When it came time for me to buy a minivan, I used Carvana and found their underwriting on car financing to be straightforward and accommodating.

Now I am shopping around for a mortgage. I contacted quite a few local and regional mortgage brokers and got no where (as soon as they saw my student loan balance basically). However when I applied through RocketMortgage, I got a pre-approval letter in 24 hours.

So the moral of the story is – larger loan companies with a wide geographic spread may have more flexible and non-biased underwriting procedures than local/smaller lenders.

#5 – If You Are Having Trouble Paying Your Bills, Pick Up The Phone

If you find yourself struggling to cover all of your bills, take a deep breath and realize that you are not alone. After you calm down about your situation, pick up the phone. It will only get worse if you ignore those letters and calls. The first people that you should call, are any tax creditors. They can garnish your pay pretty easily and without a court order. So get those on a payment plan first. Next, call your student loan servicer if you have one. Federal student loans can go into forbearance or deferment if need be so talk to them to see what you can do (you definitely do not want to default on them — because that can prevent you from getting any type of government loan in the future). Then, talk to utility providers. Most utilities (like electric and gas) are pretty flexible in arranging payment arrangements to keep your services on. If not, then reach out to your local Public Utility Commission. Sometimes they can step in to make sure your essential services don’t get interrupted.

Do your best to not miss any car or credit card payments. That will ding your credit score and be tough to recover from. It is not a rule, but most creditors will not report you late to the credit bureaus until after 30 days. That gives you a little bit of wiggle room (maybe until the next paycheck), but not much so don’t let it snowball.

#6 – Never Co-Sign or Borrow on Other People’s Behalf

And this means family and spouses/partners. Sadly, things happen and relationships sour. I took out a $2,000 loan for my ex so that he could get tools for his job and after our split, he hasn’t made a single payment. If you are looking to make any major purchases in the near future, you definitely should not be co-signing or borrowing on someone else’s behalf. Unless you are willing to take on that particular monthly payment yourself. And let’s be honest – many of us are not willing to keep paying on a debt on behalf of someone who no longer likes you or who has not fulfilled their other I.O.U.s to you.

#7 – Get a Fingerhut Account

No really. I had heard for years that this was a good way to build credit. I applied for an account with them last year, and was quickly approved. Their catalog is kind of corny and the items are overpriced. I brought a pot, a skirt and a can opener from them. Paid that all off in about 3 payments. In less than 6 months they’ve since doubled my limit. I’m not tempted to buy from them anytime soon. Their credit limit gave a nice push to my credit score. If I would have known this, I would have applied for their credit years ago.

#8 – Buy Stocks

Even though the world of stocks and investment and trading can be very overwhelming, there is not requirement to become some sort of guru to start buying stocks. Today, you can even buy stocks through apps like CashApp. All you need to remember is this: stocks in general, will increase in time due to inflation. And sadly, the inflation rate often beats the interest rate offered on many types of savings accounts. So in 2010, if you would have brought $1,000 in Apple stock, it would be worth more than $12,000 today.

#9 – Use Credit as a Tool – Not as ‘Free Money’

I got approved for my first credit card in college. It was a Wachovia card and it had a $1,000 limit. And I had a field day with it. True, I have no idea why they would approve me, someone with an income of like $5,000/year, to have such a limit. But whatever. I quickly maxed it out and made the minimum payments, and then got now where with it.

For most of my 20s, I did the exact same thing. Every card I was approved for, I maxed out. Looking back, my income was way too low to even have one of these cards. But for me back then, they were supplementing a lifestyle that wasn’t in my pay grade.

Today I get letters of pre-approved credit cards every week. And I don’t even bother to open them. I have 3 cards for now….and that is plenty for me. None of them are anywhere near maxed out. I go through just about every other account I have (i.e. checking, savings, etc.) before running charges on my credit card. The only reason why I have them is to improve my credit profile. They are not free money. If I can’t afford it with what is in my bank account, then I don’t buy it.

#10 – Do Not Buy New Cars

While it is common knowledge that buying a new car isn’t the best financial decision; it can be hard to resist the urge. Well, think about this. It used to be that most car loans were for 5 years; but now they are stretching them out to 6, even 7 years. In fact, almost a third of all car loans taken out were for 73 months or more. So while you may be able to afford your car payment with no problems now, would you be able to do so if you had a hardship? What if you had to go on maternity leave? Or relocate for a job? While the situation may be the same with a financed used car, you won’t be underwater for as long with a used car — as long as you don’t go with a subprime auto lender.

just because you can afford it, doesn’t mean that you should buy it


So at the end of the day, some of us learn our lessons earlier than others. The important thing is that we get there – with as few bumps and bruises as possible!