The year 2020 began for me as it did for many others. While I no longer practice the tradition of making New Year’s resolutions, I do intentionally express my desire for the environmental conditions that will best support my goals. I believe the combination of great ideas and hard work – planted in rich, fertile soil – can’t help but be fruitful. “Elevation” was my 2020 intention, and like others, I expected 2020 to be a year of clarity. It did not disappoint.
As a Certified Financial Planner® the objective of my work is to determine if and how clients can achieve life goals and long-term financial success through the proper management of financial resources. Most of my clients want similar things: to buy homes, save for their children’s education and plan for retirement.
I believe Human Resource professionals are essential workers on the frontlines of the pursuit of economic equity. They have dedicated their careers to promoting policies and standards that create work environments where everyone can thrive. Employees at risk of jobs becoming obsolete due to automation and technological advances will likely benefit from their ingenuity, creativity and commitment to the continual development of others. They craft benefits packages that lay a solid foundation for employees’ ability to manage financial risks through insurance programs and accumulate wealth by deferring income into retirement plans.
Many African Americans’ primary exposure to trustworthy financial literacy is through employer benefits education, which tends to be limited. I encourage you to layer atop typical retirement plan education, the opportunity for employees to receive customized education and advice that considers their real-life scenarios using quantitative and qualitative data. I invite you to strategically align with us, Black Certified Financial Planner® professionals in the fight for solutions to inequality and improving economic equity for our families and communities. Black Human Resource professionals are critical to this endeavor., and we need you.
While retirement vehicles like 401(k) and 403(b) plans are often core to successful retirement planning, there are other important factors to consider:
Create a Budget - A monthly budget helps illuminate what’s coming in (income) vs. what’s going out (expenses). Having a clear picture of surplus cash flow helps us understand how much income we can route to savings, investments and other productive ways to build wealth.
Establish a Cash Reserve - Building an emergency reserve is crucial to long-term financial well-being. Having cash to respond to emergencies and opportunities without incurring debt is often ideal. Rule of thumb is 3-6 months’ living expenses. I encourage my clients to build as much as one year to be able to respond to protracted unemployment or disruption to income.
Protect Income - Managing financial risks is fundamental to building wealth. Disability and premature death can be financially devastating to families that rely on income generated through employment. Long-term disability insurance and life insurance benefits provided by employer benefits programs serve as a solid foundation for helping families mitigate these risks.
Invest to Meet Objectives - One factor contributing to the retirement gender/racial wealth gap is that Black men and women tend to be more risk averse and invest too conservatively to meet long-term investment goals. It is important that these historically underserved and underrepresented groups receive customized financial literacy and advice that support them in making investment decisions best-suited to meet their objectives.
As Black Human Resource professionals, my hope is that you remain aware of the important role you plan in creating financially sound families and communities, and that you give your best to ensuring we all have the opportunity to thrive.