Everyone has a different life story and that includes various stories and memories of money and how it played a role when we were growing up. But the good news is, you have the right and the ability to rewrite those stories for yourself and for future generations to come. You, in fact, have what it takes to overcome the odds and build wealth.
On today’s episode of The His & Her Money Show, Lisa Frison, Head of Consumer Strategy Marketing at Wells Fargo, talks about her money story. She explains what the wealth gap is and how to build your wealth. As Lisa states, wealth is different than income. Income is what you make, it’s your household total assets minus your total liabilities.
The Wealth Gap
Through research, it was found that the median household wealth for Caucasian families in 2016 was $171,000 which, at the time, was ten times more than the African American households. Without income, people cannot fund their needs or their dreams. Wealth also creates a healthy financial position and gives a person choices, freedom, and security.
The systemic issues that come into play in the African American community are the lack of generational wealth transfer, higher rates, and amounts of college debt, as well as lower homeownership rates. On the flip side, there is an increase in income and education, but what is lacking is dedicated to wealth-building strategies.
One of the ways to build wealth is to break the stigma that “we don’t talk about it, it’s private.” Be open and communicate the money issues, challenges, and goals of the family. Also, thinking your money problems are going to go away does not make it so. You have to do something, you have to start somewhere.
Managing Your Money
Money management will help you to know where you stand with your finances so that you can take control of your financial future. Knowing that your net worth does not define your personal worth is an important aspect of wealth creation.
Stay true to your values, not with the Jones’. Your net worth does not define you. Net worth is a measure of what your assets are (cash, equity, 401k) minus your liabilities (credit card payments, car payments, mortgage).
Savings helps like a safety net. it’s there when you need it. You could also use your savings to invest and make more money. Pay yourself first: taxes, tithes, tips (tips being your personal savings), and any other savings like 401k, etc. Automating it will help you immensely in this regard. And start where you’re at, even if it’s small.
Build Wealth
Homeownership is about buying what you can afford and what you are able to manage. Work out all the costs and all the responsibility of ownership before committing to buying a house. Take on only the credit that you can afford. Always, always pay on time.
This will keep your credit rating healthy. Also, Lisa strongly suggests that you know what your credit rating is. Use the tools out there. There is a Hands-On Banking website that will be able to help you with all the money skills you need in life.
Lisa rounded it all off by encouraging everyone to start small but be consistent and where ever you can to automate because then you don’t have to wrestle with the idea every single month. It just gets done automatically for you. And remember, surround yourself with like-minded people on your financial journey.
WHAT YOU WILL LEARN IN THIS EPISODE
- The definition of a wealth gap
- How to build wealth
- What is wealth and what is income?
- How to start building wealth
- What is net worth
- Why and how to save
RESOURCES
- Wells Fargo Financial Education
- Wells Fargo Smarter Credit
- Hands On Banking
- Wells Fargo Financial Health Checker
- Wells Fargo Works (For Small Business)
Disclaimer and Disclosure – This podcast episode is sponsored by Wells Fargo. Wells Fargo is full of information and resources to help you learn more about their “prepare to prosper” initiative and financial education. For more information regarding Wells Fargo resources please go to wellsfargo.com/financial-education. All views expressed and opinions in this podcast are our own and not that of Wells Fargo.
