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Not Ready to Buy Stocks? These Budgeting and Saving Tips Will Get You There

By Wealth Noir – Aug 13, 2021 at 10:32AM

Key Points

  • Wealth Noir is a community focused on financially empowering Black Millennials.
  • Your income is only one part of the wealth-building story, but there are ways to boost it.
  • Increasing your savings rate and avoiding lifestyle creep are two keys to your financial future.

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Damien Peters, founder of Wealth Noir, gives his best tips for boosting your savings rate and how to start investing today.

One of the biggest obstacles to learning how to invest is developing the skills to budget your money and save for the future. But there are many resources available for new investors, including at the online community Wealth Noir.

In this Motley Fool Live video recorded on July 23, Fool.com editor Desiree Jones interviews Wealth Noir founder Damien Peters about how to boost your income, start a side hustle, and live below your means. 

 

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Desiree Jones: I'm just now learning about investing and talking about money. For me when I was raised, my parents didn't tell me anything about investing. I have to learn myself about investing, which is why I'm glad I'm a part of The Fool because I'm able to learn and grow. Talking about money in the Black community is very important, especially right now during the pandemic. I will be trying to stay there with you. I'm still new. I'm new to investing and honestly and truly, I personally don't think I can afford to invest right now because I'm working on my personal finances and all of that, so let's talk about what are some budgeting practices do you think can help with when it comes to money.

Damien Peters: Ironically, outside of budgeting one thing actually I always tell people is to make more money. This can be as simple as asking for a raise or getting very intelligent about your own compensation and whether you should change jobs or not. But one big way I have built money and we oftentimes talk about a corporate job being bad or holding you back, but the truth is, it has funded a lot of my ability to build wealth. I focused on my career and I was able to do that. But in addition, I have always had more than one job. I've always had a side hustle. I've always built something on the side. In addition to wealth where I work, I have two other jobs that I work, so making more money, there's a lot of options out there and people should feel comfortable using these tools and skills and what they have available to increase the income that they make. Some of the other stuff is things that you'll hear all the time from anyone who talks about personal finance. Spend less than you make. Save and increase your savings rate. Even one thing I would say to you is you feel as if I can't afford to save, but even if you were to start at $1 per month, something very, very small, the point is you participating in investing will increase your knowledge. It will increase the amount of attention that you pay in there, and when you are comfortable to put more money in, you won't be trying to figure out what to do with this $10,000. You'll be like, "Oh, great. I've been working with $1 per month, then $10 per month," whatever it may be. Participate in the market, start investing and increase, and I always tell people either start with what you know or just start with something really boring. Invest in the entire U.S. stock market with one ticker symbol, and there are great sources like The Fool which really help give you the due diligence and some information about specific companies that you may not have considered or a place that you may not have thought about. Living below your means falls into that. It's very, very easy to earn $500,000 and spend $550,000. Lifestyle creep is very consistent. It was something I worked on very much in my life between 2012 and 2015, so when I graduated grad school to when I was working at Facebook, my income had quadrupled over the course of the year along with my wife's, but we still lived on approximately the same budget at the beginning. What I found was I had all this extra income coming in and that I could deploy the capital and put it into other places. One thing that I was able to do with that capital and wealth was take some time off from working and actually move to Spain for two years, so I was able to enjoy that. Understanding the amount of money coming in, understanding your expenses, and managing that, and being smart about investing the difference really makes sense. Really matters, and then some of the other stuff, which is hopefully everyone has heard about before about having an emergency fund. The truth is, even when it comes to your investments you don't want to be pulling from them because your car broke down or something along those lines. If there's a large downturn, you don't want to feel overtly nervous because you really live off or need that money, so having an emergency fund, three to six months, just in case there is a downturn. In case there is a health situation that shuts down everything, is really important, and then prioritizing high-interest debt in particular. Credit cards, number one up there. Typically, I say if the percentage you're paying on your debt is low, 3% to 4%, things like that. It may not be the most important thing to prioritize that as opposed to investing that money, but if you're paying 15%, 20%, 25%, 30% on any type of debt, get rid of that because that is a drag on your entire portfolio that needs to be made up somewhere.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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