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MONEY

5 Money Habits Black People Need To Break

So that we can do better with our finances

BY Naledi K

Apr 20, 2022, 04:36 AM

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Black people have survived and done incredibly well to create wealth for themselves from basically nothing. However, most Black people are still playing catch up where building generational wealth is concerned and the setback is not for lack of hard work from the Black nation but the fact that the system is mostly rigged against us. That said, if Black people are going to flip the script then the key to that financial freedom will only come from unlearning a lot of money habits that have held us back.

There are a lot of historical events to consider whenever we have to talk about why a large number of Black people are still poor. They range from slavery to colonialism and everything in between. These events, even though some may be considered as the past, certainly had and still have a large effect on the financial literacy that black people acquired.

Most of our parents were only taught the basics of money and had to figure out the rest, mostly from trial and error. Their attempts to get more knowledge where acquiring and spending money is concerned was always fogged by an anti-Black system that stood to benefit from their lack of knowledge.

However, since South Africa became a democratic state, most people have worked hard to level the field and educate themselves on how to not only make money to survive but to build lasting legacies and create generational wealth.

For the young generation, there is an even bigger fighting chance because information about finances is widely available even though access to some resources remains sketchy. Even so, we have to unlearn a lot of the bad financial habits we've consciously or unconsciously picked up from our parents, communities, and society as a whole.

It takes a lot of work to undo a lifetime of bad financial choices but it is possible. Once you know better, you really have no excuse to continue going down the rabbit hole of making reckless and irresponsible financial decisions.

Here are the top, popular money spending habits to break on your way to real financial freedom.

Prioritizing Show Off

We have to get to a point as a nation where we understand that those material things such as cars and wearing expensive brands do not equate to one being successful or even rich for that matter.

As soon as our definition of success changes, the people won't take ridiculous loans to buy cars they know they can't afford and they won't sacrifice making long-term investments with their money instead of prioritizing being the rich malume or aunt at the family-get-together.

Living Off Credit

I grew up with a pretty standard understanding that a person who wants nice things must be prepared to always live in debt. There was an unspoken understanding in most Black communities that if a bank can give you thousands worth of credit then you are wealthy. It isn't true of course. 

Now we know that a good credit record is important but living in debt is far from being healthy or acceptable for people who want to build true wealth. Don't live in debt, unlearn this mentality asap.

Not Investing

Credit must be given where due and I have to mention that Black people really came up with creative ways to stretch the little money they made in order to see some of their dreams realized. Most of us still have no idea how our parents raised us to R3000 salaries per month. However, I know that even though there's definitely room for improvement, Black people made art out of saving money. I only need to give you stokvel as an example. 

But, we are still a long way from learning and understanding what it means for one to have an investment policy and have your money work for you. Investing is critical in generational wealth building.

Pro Tip: Start Them Young

Teach your children (young siblings, nephews, cousins etc.) what you wish you were taught about money growing up. Everything from the concept of working for money, to paying taxes, saving money, investing money and everything in between.

This way, even if you don't end up being the first billionaire in your family, you know that someone will, thanks to the education you would have imparted with them.

Not Working With A Budget

The biggest mistake one can make is not having a budget especially if you live paycheck to paycheck. You will find yourself spending more than you should and even spending money that you do not have. Just because you are on payroll and you think that the next month will cater for itself, you shouldn't deplete that month's salary. The one thing that the Covid-19 Pandemic period should have taught you by now is that tomorrow is not promised. Anything may happen and you might find yourself out of a job. 

Not Prioritizing

When it comes down to the few shillings or whatever you get in a month or even a day for those who are paid on a day basis, it is best to know or figure out the things that are needed the most. There are certain things that one can do without, there are things that one can substitute and there are those that are a basic need. You need to prioritize the basic, that is what you can't do without and the rest follows. But it will all depend with the money at hand. Don't live beyond your means.