Money Matters - We Gonna Be Alright

8 min read

Photo by Brianna Eastridge

Last week, while scrolling through LinkedIn, I was met with one layoff announcement after another. It has been disheartening to see so many people getting blindsided by learning they no longer have a job. 

As I read the posts and considered the impact on the individuals and their families, my thoughts drifted back to October 1, 2020, when the head of my department called to notify me that I was being laid off. I remember the angst and nervousness I felt leading up to that fateful day. The institution I worked for at the time had had a massive layoff in April of that year at the height of the pandemic, and I had been spared. But by September, there were rumblings of another round of layoffs. Despite the advance notice, I was still not mentally prepared to hear the words from the department head. Sitting on the bare floor of the apartment I had moved into earlier that morning, I was overcome with knots in my stomach as water made its way from my eyes to my cheeks. 

That period of unemployment was tough, and I am forever grateful for my network's outpouring of love, support, and kindness during that time. But I'd be grossly remiss not to mention the safety net I had and the difference it made as I navigated not having a job. I had a few months of savings, a severance package, and the generosity of my godmother to weather through this period. My financial circumstances afforded me the privilege to sit, take a deep BREATH and let the news sink in. I was able to grieve the loss of not only the job, but also my colleagues and friends, my routine, and my identity, which I had sadly attached to my position. I did not have to immediately jump into a job search. I did not have to worry about where my next meal would come from. I was able to think about what I wanted next for myself. I used this time to focus on Kume and pursue a higher calling and purpose. This period reminded me that my sense of value came from within, not from my job title.

I know many people don't have this safety net. So this week, I want to talk about something many of us shy away from, finances. I want to have a money conversation amid the looming recession. A recession may be an uncertain time, but the best thing we can do is take proactive steps now to prepare ourselves. Now more than ever, financial education is important, so we can feel good about where we are with our money, regardless of any challenges.  

To explore how we can prepare for an economic downturn and stay on top of our finances, I reached out to Rosa Colin, a bilingual therapist, Certified Financial Education Instructor (CFEI), Certified Financial Social Work (CFSW), and Financial Fitness Coach (FFC), with a strong passion for personal finance and mental health. Rosa spoke openly and vulnerably about her journey with money on S2EP7 of our podcast. Rosa is also the founder and CEO of Mujeres Building Abundance, a coaching platform for Mujeres of Color to re-write their narrative around money and feel empowered and in control of their financial journey. Below she shares advice and some steps you can take to prepare your finances to overcome this economic turmoil. 

What to do if I expect a decline in income, whether job loss or another financial hurdle?

On average more than half of Americans cannot cover a $1,000 emergency expense. I encourage you to start your emergency fund. Most financial experts say to save 3 to 6 months of your monthly expenses. I, personally say, save 6 to 12 months of your monthly expenses. Many people lost their jobs during the pandemic and were not able to afford their monthly expenses. The pandemic started in 2020 and people are still recuperating financially from it. Please know that saving for this amount will take time. For now, I would recommend you save at least $500 to $1,000. Always prepare for the unexpected, as this feeling is priceless. In addition to saving for an emergency fund, I would look into building your income streams. Examples of these include investing in the stock market, real estate, publishing ebooks, renting out your car or parking space, creating a blog, opening a high-yield savings account, teaching, and the list goes on. Take this moment to reflect on how you can make money from your talents and skills. 

Do I slow down on savings/investing for retirement, so I have more retirement liquid cash? Or do I try and make cuts elsewhere?

Ask yourself, what would happen if I stop saving and investing in my retirement? Will this delay my ability to achieve financial freedom for myself and my loved ones? First, I want you to think about the purpose of your savings and your investments. Do they align with your values? If they do, I would not slow down. Instead, I would ask myself where can I make cuts in my spending plan. Track your expenses, ideally for 2 to 3 months, and notice any patterns. Are you spending too much on dining out, clothes, accessories, entertainment, and subscriptions? Can you maybe consider meal prepping, canceling certain subscriptions, renting out clothes, or recreating new outfits from the clothes you already have? This question requires you to reflect on the kind of life you want to live. Remember that you get to define what success looks like for you. 

What are the components of a solid financial foundation?

Always start with your core values. Take a moment to reflect on what brings you joy and what financial freedom looks like for you. Now that you have your list of values, create goals around them. In order for you to achieve these goals, it will be important for you to create a spending plan that works for you. Once you have created this, start tracking your spending. Doing so will allow you to see any patterns and help you to identify specifically what you truly value. It will also help you to realize the hard truth about cutting things that will not serve your long-term financial goals. Another important component to consider is paying off debt. From working with clients, I've noticed that not carrying debt helps them feel lighter and more excited about life. Along with accomplishing these steps, I also do not want you to forget about investing. Investing is also part of building a strong financial foundation as it is a vehicle to building wealth for you and your loved ones. 

What are the best ways to start saving money?

I want you to feel inspired, motivated, and excited to save. Reflect on what's truly important to you and what financial freedom looks like for you. I strongly believe that you will feel more motivated to save if your saving goals are aligned with your values. There are many ways you can start saving. Before my clients opened a high-yield savings account, they started saving using an envelope system. Once they felt confident in their ability to save, they decided to open an online savings account. It takes 21 days to create a habit. If saving feels daunting, don't be afraid to ask for an accountability buddy. You are not alone. 

How can I keep my money safe and secure during this volatile time?

You can keep your money in a high yield savings account. One of my personal favorites is ALLY Bank and as of now they are offering an interest rate of 2.75%. I also love that you can organize your savings using their buckets. Another way you can keep your money saved that I recently learned about is by purchasing an I-Savings Bond. These are bonds that are sold by the US government and they could only be purchased through the treasurydirect.gov website. The interest rate for I-Bonds shifts along with inflation and it resets every 6 months. The current rate is 6.89%. You can invest with a minimum of $25 or up to $10,000. An important thing to know is that you have to own these bonds for a full year before you can withdraw the money and if you withdraw the money before holding them for five years, then you'll forfeit the previous three months of interest. However, starting in year 6 you can take out the money without any penalty-free. If you do decide to withdraw the money after 12 months just know that you will owe federal income tax on the interest you earned. 

How do you practice mindfulness as it relates to your finances?

At the start of every year, I practiced Deepak Chopra's 21 day abundance meditation. I continue this practice every month for a year. However, I have to admit that there are months when I discontinue the meditation. When this happens, I am intentional about giving gratitude every morning and every night. I also do my best to say a money affirmation in the mornings or before I sleep as well. 

Do you have a favorite money affirmation? 

I absolutely love money affirmations. The one I've been saying since I started my money journey in 2018 is: Money comes to me in expected and unexpected ways. 

While the discomfort of a recession will be felt by most of us, there are ways to prepare our finances to see ourselves and still thrive financially. I hope you find these tips helpful and that they bring ease and stability to your life. If you take nothing else from this article, remember that being laid off is not a reflection of who you are as a professional or as a person. 

If you have any specific personal finance-related questions, you can book a free 30-minute consultation with Rosa. 

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